Packaging manufacturer Coveris has agreed to divest its Americas packaging business to Transcontinental (TC Transcontinental) in a deal worth $1.320bn.
Coveris Americas, which is a subsidiary of Sun Capital Partners portfolio firm Coveris, is engaged in manufacturing of several flexible plastic and paper products, including rollstock, bags and pouches, coextruded films, shrink films, coated substrates and labels.
It has 21 production facilities, as of 31 December 2017. It employs over 3,100 people.
Coveris CEO Jakob Mosser said: “This sale will enable us to focus on our operations in Europe, where we are one of the largest players in the flexibles and rigid packaging market.
“This supports our recent strategic focus on delivering high performance and sustainable packaging solutions for our customers in the food, pet food, medical and pharmaceutical markets.”
TC Transcontinental expects the acquisition to significantly diversify its business into flexible packaging.
Additionally, the acquisition is expected to expand TC Transcontinental's product offering greater film manufacturing capabilities.
Coveris, however, will retain its operations including Rigid, EMEA, and UK Food & Consumer businesses.
Upon completion of the deal, Coveris will have manufacturing facilities in 14 countries, 44 strategically located facilities and over 8,000 employees.
Transcontinental board chairman Isabelle Marcoux said: "Today's announcement marks a turning point in TC Transcontinental's 42-year history. This transaction crystallizes our strategic shift toward flexible packaging and solidifies our commitment to profitable growth.”
Coveris plans to use the proceeds of sale to repay certain of its existing indebtedness.
TC Transcontinental president and CEO François Olivier said: "The acquisition of Coveris Americas adds significant depth and scale to our existing platform, with flexible packaging operations now expected to be our largest division in terms of TC Transcontinental's pro forma revenues based on its fiscal year 2017.
“This transaction complements and bolsters our existing product offering in several flexible packaging end markets including dairy, pet food and consumer products.
“Additionally, it allows us to enter new and attractive flexible packaging end markets such as agriculture, beverage and protein.”
Planned to be completed in mid 2018, the transaction is subject to customary closing conditions, including regulatory approvals.
