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Private equity firm Kingswood Capital Management has agreed to acquire the paper-based packaging arm of Coveris, as the European packaging group sharpens its focus on flexible plastics and PE investors continue to target sustainable materials assets.

Kingswood said on Tuesday it had entered into a definitive agreement to buy Coveris’ Paper Business Unit, which will operate as a standalone company under its former name, Paragon Print and Packaging, following completion of the transaction.

Paragon produces paper-based packaging for food, household and personal care customers, including labels, cartons, trays and lined board products. The business generated annual sales of around €270 million and employs approximately 1,400 people across the UK and continental Europe.

Kingswood said it plans to retain Paragon’s existing management team, with chief operating officer Jo Ormrod appointed chief executive following completion. The unit will be rebranded immediately upon separation, restoring a name that predates its integration into Coveris.

The acquisition marks another complex corporate carve-out for Kingswood, which has increasingly targeted industrial and materials businesses at strategic inflection points.

The firm said it sees growth potential in paper-based packaging as food and consumer goods manufacturers seek recyclable alternatives to plastic amid tightening environmental regulations.

Coveris, backed by private equity firm Sun Capital, said the divestment would allow it to focus on its core flexible packaging operations across Europe, the Middle East and Africa.

Following the sale, Coveris will operate 17 flexible packaging sites in EMEA and the UK, generating annual sales of about €600 million and employing 2,500 people.

Christian Kolarik, chief executive of Coveris, said the paper unit had reached sufficient scale and maturity to operate independently after being established in 2020.

While flexible plastics manufacturers continue to invest in recyclability and downgauging, paper-based formats remain attractive to brand owners seeking fibre-based solutions aligned with circular economy targets.

Jefferies acted as financial adviser to Kingswood, with Kirkland & Ellis providing legal counsel.

The deal, signed in January, is expected to close in the first quarter of 2026, subject to customary regulatory approvals. Financial terms were not disclosed.