Constantia Labels operates 23 plants, including this one in Heilbad Heiligenstadt in central Germany.
Constantia Flexibles will sell its labels division to Multi-Color Corporation in a $1.3 billion deal.
Constantia Labels will add further presence in the food and beverage industry to Ohio-based Multi-Color’s strong wine and spirits and home and personal care platforms.
Constantia Flexibles CEO Alexander Baumgartner said: “Following a detailed strategy review, we decided that our top-performing labels division would be better suited with another partner, which will support its ongoing growth story.”
As part of the sale, Constantia will receive a 16.6% stake in Multi-Color, becoming its largest single shareholder. According to Constantia’s majority shareholder, Wendel, the stake will allow it to ‘retain an exposure to the growth of [the labels] market’. Constantia will receive two positions on Multi-Color’s board.
Baumgartner continued: “At the same time, Constantia Flexibles will participate in the future success story of Multi-Color as its largest shareholder. Constantia Flexibles will use proceeds from the transaction to deleverage its balance sheet and enable further acquisitions in the dynamic and consolidating flexible packaging industry. We will also focus on innovative products and services, as well as new technologies to strengthen our existing food and pharma divisions.”
The labels division achieved sales of €605 million in 2016 and operates a total of 23 plants across 14 countries, with 2,800 employees.
Analysis: ‘Focusing on flexibles’
The sale of its labels division will allow Constantia to focus on its core product – flexible packaging – which it has spent so long growing. It has invested in the business, putting €3 million behind an upgrade to its printing capabilities at its dairy lid manufacturing centre in Germany this February. It then announced the acquisition of Italian dairy lidding company TR Alucap in March.
The €1.15 billion enterprise value will allow Constantia to further its position in flexible packaging. Boss Alexander Baumgartner has already hinted at ‘further acquisitions’, and chairman of the board Frédéric Lemoine spoke about creating additional value through new targets. It may have sold its labels division, but you get the sense that something else is already in the pipeline.
After completion of the transaction, Multi-Color will generate pro-forma sales of roughly $1.6 billion and pre-tax earnings of $300 million before synergies.
Mike Henry, current CEO of Constantia Labels, will become CEO-elect of Multi-Color, and will work closely with the current CEO Vadis Rodato, who will retire in early 2018 after a transitional period.
It will also widen the joint Group’s geographical footprint and create long-term synergies that will benefit all parties involved. Mike Henry, current CEO of Constantia Labels, will become CEO-elect of Multi-Color, and will work closely with the current CEO Vadis Rodato, who will retire in early 2018 after a transition period.
Frédéric Lemoine, chairman of the board of Constantia as well as its majority shareholder, Wendel, added: “I am very pleased with this excellent transaction, which will give Constantia Flexibles additional resources to pursue its growth and development in flexible packaging in the coming years.
“Since 2015, Wendel has supported Constantia Flexibles in its international growth and development. During this time, Constantia has, in particular, acquired five companies in Europe and emerging markets. Today’s strategic transaction will enable Constantia Flexibles to focus on flexible packaging and step up its investments in innovation and growth through further value-creating acquisitions that will give it exposure to new markets and new initiatives that will generate organic growth.”
Multi-Color executive chairman Nigel Vinecombe said: “The acquisition of Constantia Labels marks a major milestone in the evolution of Multi-Color. We are bringing together complementary talents in markets and geographies, diversifying our business and creating a global leader with a transaction that is financially attractive, which will better help us serve our customers. I welcome Mike Henry to the executive team and representatives from Constantia Flexibles to the Board of Directors of Multi-Color.”
© FoodBev Media Ltd 2017