Sonoco Products Scoops Up Tegrant for $550M

By Features FOXBusiness

Sonoco Products (SON) has inked a deal to acquire Tegrant, a provider of retail security packaging, from Metalmark Capital for $550 million in cash, highlighting Sonoco's goal of  becoming a North American leader in multi-material protective packaging.

Continue Reading Below

Sonoco, a Hartsville, S.C.-based provider of industrial and consumer packaging products, said the price is about 6.8 times Tegrant’s estimated 2011 EBITDA of $74 million. The acquisition, which will be paid for using cash and debt, is the largest in Sonoco’s history.

The combined company is estimated to generate annual sales of $5 billion in 2012, with the transaction becoming accretive to Sonoco’s earnings by 10 cents a share starting next year. When fully realized, the companies predict to see synergies of about $11 million.

“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,” said Sonoco CEO Harris DeLoach in a statement.

Headquartered in DeKalb, Ill., Tegrant operates three businesses including Protexic Brands, its largest segment, which makes molded expanded foam. That unit is expected to represent as much as 11% of Sonoco’s projected sales in 2012.

Tegrant CEO Ron Leach has agreed to start with Sonoco and continue running Tegrant’s businesses.

What do you think?

Click the button below to comment on this article.