Transcontinental Inc is poised to buy the U.S. unit of plastics packager Coveris Holdings S.A for US$1.32 billion ($1.7 billion) as the Canadian printing company shifts its focus to a lucrative flexible packaging business.
As part of the deal, according to Reuters, Transcontinental will take control of privately held Coveris Americas’s 21 production facilities that make rollstock, bags and pouches, shrink films and labels, among others. The U.S. unit racked up US$966 million in revenue in 2017.
Coveris said it will use the proceeds from the sale to pay off debt. Upon closing the sale, the company will operate 44 facilities in 14 countries.
The plastics and packaging industry has been consolidating fast to keep up with the rising demand from ecommerce and automotive sectors.
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.
Transcontinental told Reuters it expects the acquisition to save costs of about $20 million over the next two years and will use both cash in hand and debt for the deal.
Transcontinental is expected to close the deal in the third quarter of 2018.
(Reuters)
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