MONTREAL — Transcontinental Inc. is buying the Coveris Americas business for US$1.32 billion as part of its strategic shift toward flexible packaging, which has been in the works amid dwindling revenue from newspapers and other paper-based printing.
“This transaction complements and bolsters our existing product offering in several flexible packaging end markets including dairy, pet food and consumer products,” said François Olivier, chief executive officer of TC Transcontinental.
“Additionally, it allows us to enter new and attractive flexible packaging end markets such as agriculture, beverage and protein.”
He said that the cash deal, worth C$1.72 billion, will build on the two companies’ combined strengths.
Transcontinental also estimated it can achieve US$20 million of cost-savings over a 24-month period.
As of the end of 2017, Coveris Americas had 21 production facilities worldwide and employed more than 3,100 employees, mostly in the Americas.
It generated US$966 million in revenue last year and US$128 million in adjusted earnings before taxes and other expenses.
“This transaction crystallizes our strategic shift toward flexible packaging and solidifies our commitment to profitable growth,” Isabelle Marcoux, chair of Transcontinental Inc.’s board, said in a statement.
“We are convinced that this transformational acquisition will be a driver in the creation of long-term value for all of our stakeholders.”
The Coveris deal is subject to applicable anti-trust approvals and is expected to be completed in the third quarter of TC Transcontinental’s 2018 financial year.
The Montreal-based company is buying the flexible packaging business from Coveris Holdings SA, which says it will use the proceeds to pay some of its debts.
Coveris Holdings is a multinational manufacturing company operating in several industry segments. It will continue to have manufacturing plants in 14 countries and more than 8,000 employees worldwide.