TC Transcontinental to Acquire Coveris Americas
TC Transcontinental Inc has entered into a definitive agreement to acquire Coveris Americas for approximately USD $1.32 billion (approximately C $1.72bn), subject to customary closing adjustments.
Coveris Americas, a business held by Coveris Holdings SA, a portfolio company of Sun Capital Partners, Inc, is one of the top ten converters of flexible packaging and other value-added products in North America based on revenues for its fiscal year ended 31 December 2017. Headquartered in Chicago, Illinois, Coveris Americas manufactures a variety of flexible plastic and paper products, including roll stock, bags and pouches, coextruded films, shrink films, coated substrates, and labels. As of 31 December 2017, Coveris Americas operated 21 production facilities worldwide, namely in the Americas, the United Kingdom and Australasia. Coveris Americas has over 3,100 employees, the majority of whom are located in the Americas.
For its fiscal year ended 31 December 2017, Coveris Americas generated USD $966 million in revenues and USD $128m in adjusted EBITDA.
“Today’s announcement marks a turning point in TC Transcontinental’s 42-year history. This transaction crystallises our strategic shift toward flexible packaging and solidifies our commitment to profitable growth,” says Isabelle Marcoux, chair of the board of Transcontinental Inc, based in Montréal, Canada. “We are convinced that this transformational acquisition will be a driver in the creation of long-term value for all of our stakeholders. It is with pride that we begin the next chapter of our successful journey with Coveris Americas, its employees and customers, building on our values of respect, teamwork, performance and innovation.”
François Olivier, president and CEO of TC Transcontinental, adds, “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 in terms of TC Transcontinental’s pro forma revenues based on its fiscal year 2017. This transaction complements and bolsters our existing product offering in several flexible packaging end markets…Additionally, it allows us to enter new and attractive flexible packaging end markets such as agriculture, beverage and protein.”
“Today marks an exciting milestone for Coveris Americas as we join TC Transcontinental, a company that shares our passion for growth through innovation, service and quality,” says Craig Reese, CEO of Coveris Americas.
Complementing its solid printing and media operations, the acquisition of Coveris Americas:
- Significantly diversifies TC Transcontinental’s business into flexible packaging.
- Expands TC Transcontinental’s product offering with best-in-class capabilities and greater film manufacturing capabilities. (Complementary manufacturing capabilities in printing, lamination, converting and extrusion, with significant expertise in high-end blown extrusion as well as cast extrusion.)
- Expands TC Transcontinental’s product offering with barrier films, thermoformed films, shrink bags, cast nylon, multi-wall bags, banana tree bags, mulch films and coatings.
- Enhances TC Transcontinental’s relationships with large, market leading customers.
- Provides TC Transcontinental with an integrated flexible packaging platform leading to potential economies of scale (adds an extensive footprint of 21 production facilities in the United States, Canada, Ecuador, Guatemala, Mexico, the United Kingdom, New Zealand and China to TC Transcontinental’s seven existing flexible packaging facilities),
- Increases its business scale thereby strengthening TC Transcontinental’s competitive position.
Following the acquisition of Coveris Americas, there will be expected annual cost synergies of approximately USD $20m to be achieved over a 24-month period following the Acquisition, generated mainly from economies of scale.
TC Transcontinental is Canada’s largest printer and a key supplier of flexible packaging in North America. TC Transcontinental currently has over 6,100 employees in Canada and the United States, and had revenues of approximately USD $2bn for the fiscal year ended 29 October 2017. For more information, visit TC Transcontinental’s website at www.tc.tc.
