According to Harris DeLoach, Sonoco chairman and CEO, the acquisition of Tegrant is the largest in Sonoco’s history and will create a North American leader in multi-material protective packaging.
Tegrant is projected to generate 2011 sales of approximately $440m. When combined, Sonoco is projected to generate sales of approximately $5bn in 2012. The transaction is expected to be accretive to Sonoco’s 2012 pro forma earnings by approximately $.10 per diluted share, including estimated adjustments for purchase accounting and approximately $11m of expected synergies, when fully realised.
The total purchase consideration, adjusted for expected tax benefits, is approximately 6.8 times Tegrant’s estimated pro forma 2011 Ebitda of approximately $74m, including synergies.
The transaction is expected to be financed from existing cash and debt with an estimated credit leverage ratio of 2.2 times at closing. Sonoco intends to reduce the incremental debt using free cash flow over the next few years. The acquisition is subject to normal regulatory review and is expected to close in November 2011.
DeLoach said: “The addition of Tegrant and its family of businesses significantly advances Sonoco as a protective packaging solutions leader and greatly expands the products, services and capabilities we can offer our customers.
“Sonoco’s combined Protective Packaging businesses will represent approximately 11% of Sonoco’s projected 2012 sales and further enhance our ability to grow in both consumer and industrial markets globally. As an example, Tegrant brings to Sonoco immediate access to faster growing markets such as medical devices, pharmaceuticals, and health and beauty, while providing us expanded access to a variety of industrial components and automotive markets.”
DeLoach said that Tegrant’s president and CEO, Ron Leach, has agreed to stay with Sonoco and continue leading Tegrant’s businesses. John Colyer, Sonoco’s vice president, Global Industrial Converting, will be given expanded responsibility for the company’s global protective packaging, tubes and cores, and wire and cable reels integration leader for the combined Sonoco Protective Packaging businesses.
Source: Sonoco
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