Sonoco Products (NYSE: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.
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.