Jenni Spinner, Senior Editor / Packaging Digest

Sonoco to acquire Tegrant

Sonoco, one of the largest diversified global packaging companies, today announced that it has signed a definitive agreement to acquire Tegrant Corp., a leading provider of highly engineered protective, temperature-assured and retail security packaging solutions, from Metalmark Capital for $550 million in cash. The final consideration is subject to a normal adjustment of net working capital.

According to Harris E. DeLoach, Jr., Sonoco chairman and CEO, the acquisition of Tegrant is the largest in Sonoco's history and will create a North American leader in multimaterial protective packaging. Tegrant is projected to generate 2011 sales of approximately $440 million. When combined, Sonoco is projected to generate sales of approximately $5.0 billion 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 $11 million of expected synergies, when fully realized.

The total purchase consideration, adjusted for expected tax benefits, is approximately 6.8 times Tegrant's estimated pro forma 2011 EBITDA of approximately $74 million1, 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.

Tegrant is headquartered in DeKalb, Ill., and operates three strategic business units. Protexic Brands, the largest business unit, is North America's premier manufacturer of molded expanded foam. It serves a number of industries, including high technology, consumer electronics, automotive, appliances and medical devices. Tegrant's ThermoSafe Brands unit is the world's leading provider of temperature-assured solutions, primarily used in packaging temperature-sensitive pharmaceuticals and food. Tegrant's Alloyd Brands business unit is a leading manufacturer and designer of high-visibility packaging, printed products and blister packaging machines for retail and medical markets. Tegrant operates more than 30 manufacturing, design and testing facilities in the United States, Mexico and Ireland and employs more than 2,000 employees.

"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 DeLoach.