Transcontinental to buy flexible packaging company Coveris Americas for $1.32 billion

Transcontinental Inc. (Montréal) has entered into a definitive agreement to acquire the business of Coveris Americas (Chicago), a business held by Coveris Holdings S.A., a portfolio company of Sun Capital Partners Inc., for $1.32 billion. The acquisition is subject to customary closing adjustments.

Coveris Americas is one of the top 10 converters of flexible packaging and other value-added products in North America based on revenue. It manufactures a variety of flexible plastic and paper products, including rollstock, bags and pouches, coextruded films, shrink films, coated substrates and labels. As of Dec. 31, 2017, Coveris Americas operated 21 production facilities in the Americas, the United Kingdom and Australasia and employeed more than 3,100 people.For its fiscal year ended December 31, 2017, Coveris Americas generated $966 million in revenue.

“The plastics and packaging industry has been consolidating fast to keep up with the rising demand from e-commerce and automotive sectors,” wrote Reuters reporting on the acquisition. In February, LyondellBasell Industries NV bought smaller rival A. Schulman Inc. for $2.25 billion, doubling the size of its business that supplies plastic compounds to the packaging, electronics and building markets, noted Reuters.

"Today’s announcement marks a turning point in Transcontinental’s 42-year history. This transaction crystallizes our strategic shift toward flexible packaging and solidifies our commitment to profitable growth," said Isabelle Marcoux, Chair of the Board of Transcontinental Inc., in a prepared statement.

"We are thrilled to announce such a game-changing transaction for TC Transcontinental and to bring our vision of becoming a North American leader in flexible packaging to life," said François Olivier, President and Chief Executive Officer of TC Transcontinental. "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. 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."

The acquisition is expected to be completed in the third quarter of fiscal year 2018.

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