Sonoco Products Company (NYSE: SON) has announced its agreement to acquire Eviosys, Europe’s leading food cans, ends, and closures manufacturer, from KPS Capital Partners, LP for approximately $3.9 billion. The transaction is expected to accelerate Sonoco’s strategy to focus on and scale its core businesses and invest in high return opportunities, both organically and inorganically.
Eviosys is estimated to have 2024 revenues of approximately $2.5 billion and 2024 adjusted EBITDA of approximately $430 million. Notably, Eviosys has increased EBITDA by approximately 50% since 2021.
Sonoco expects to achieve over $100 million of synergies from the integration of Eviosys, with Rodger Fuller, Sonoco’s Chief Operating Officer, leading the integration. The company anticipates achieving over $100 million of synergies within 24 months.
The transaction is expected to be immediately accretive to adjusted EPS and over 25% accretive to 2025 expected adjusted EPS. Sonoco also intends to retain an investment-grade rating with plans to deleverage to below 3.0x within 24 months.
Strategically, the acquisition of Eviosys is expected to establish global leadership in Sonoco's core metal packaging business, creating a leading position in a core business for the company. Sonoco has identified over $100 million of potential synergies from the optimization of sourcing, supply chain improvements, raw material procurement savings, manufacturing footprint optimization, and streamlining SG&A.
Sonoco also plans to advance its portfolio transformation strategy with divestitures, intending to divest Thermosafe, its leading temperature assured packaging business, as well as other businesses, and expects to achieve at least $1 billion of total proceeds from divestitures in the next twelve to eighteen months.
The financing of the transaction will involve new debt and the proceeds from an issuance of up to $500 million in equity. KPS has agreed to invest up to $200 million in Sonoco to support the transaction through the equity offering.
The transaction is expected to occur by the end of 2024, subject to the completion of required works council consultations, the receipt of required regulatory approvals, and other customary closing conditions.
Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are serving as financial advisors to Sonoco, while Freshfields Bruckhaus Deringer LLP is serving as Sonoco’s legal counsel. Rothschild & Co is acting as financial advisor to Eviosys, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as Eviosys’s legal advisor. As a result of these announcements, the company's shares have moved -4.0% on the market, and are now trading at a price of $53.35. For the full picture, make sure to review Sonoco Products's 8-K report.
