Advances Sonoco’s Shareholder Worth Creation Technique By means of Disciplined and Excessive Return Capital Funding
Transaction Worth of Roughly $3.9 Billion Represents a A number of of seven.3x 2024 Anticipated Adjusted EBITDA Together with Synergies
Rodger Fuller, Chief Working Officer, to Lead Integration; Anticipate to Obtain Over $100 Million of Synergies Inside 24 Months
Acquisition Anticipated to be Instantly Accretive to Adjusted EPS and Over 25% Accretive to 2025 Anticipated Adjusted EPS1
Transaction Advances Portfolio Transformation Technique with Initiated Execution of at Least
$1 Billion Divestiture Plan, with Web Proceeds for Deleveraging
Sonoco Intends to Retain an Funding Grade Ranking with Plans to Deleverage to Under 3.0x Inside 24 Months
Sonoco will Host an Investor and Analyst Convention Name At the moment at 8:30 a.m. ET
HARTSVILLE, S.C., June 24, 2024 (GLOBE NEWSWIRE) — Sonoco Merchandise Firm (“Sonoco” or the “Firm”) (NYSE: SON), a world chief in high-value sustainable packaging, immediately introduced it has entered into an settlement to accumulate Eviosys, Europe’s main meals cans, ends and closures producer, from KPS Capital Companions, LP (“KPS”) for roughly $3.9 billion (the “Transaction”).
The Transaction accelerates Sonoco’s technique to concentrate on and scale its core companies and spend money on excessive return alternatives, each organically and inorganically. Following the Transaction, Sonoco would be the main steel meals can and aerosol packaging producer globally. Each Sonoco’s steel enterprise and Eviosys have significant business momentum and the Transaction facilitates Sonoco’s potential to accomplice with prospects and lead with innovation and sustainability.
Eviosys is a number one world provider of steel packaging, producing meals cans and ends, aerosol cans, steel closures and promotional packaging to protect the merchandise of tons of of client manufacturers. Eviosys has the biggest steel meals can manufacturing footprint within the EMEA area, with roughly 6,300 staff in 44 manufacturing amenities throughout 17 international locations. Sonoco estimates Eviosys’s 2024 revenues shall be roughly $2.5 billion and its 2024 adjusted EBITDA shall be roughly $430 million. Eviosys has significant business and operational momentum and has elevated EBITDA by roughly 50% since 2021.
Sonoco expects to realize over $100 million of synergies from the combination of Eviosys with Sonoco’s complementary steel can enterprise. Rodger Fuller, Sonoco’s Chief Working Officer, will lead the combination with a concentrate on buyer and provider relationships, worker continuity, operational excellence, and synergy realization, whereas combining the very best of Sonoco’s tradition with the wealthy historical past and heritage of Eviosys.
“The acquisition of Eviosys establishes our world management in steel meals can and aerosol packaging, marking an thrilling milestone in our technique to scale our core strategic steel packaging platform and place Sonoco for long-term worth creation,” stated Howard Coker, President and Chief Govt Officer of Sonoco. “Eviosys brings intensive world attain and a pretty, rising buyer base that completely enhances our present steel packaging providing. Along with the proficient workforce at Eviosys, we’re targeted on unlocking new alternatives in enticing end-markets, offering our prospects with a stronger worth proposition and producing sturdy returns for our shareholders.”
“For over 200 years, we now have supplied best-in-class steel packaging that enhances the enchantment of our prospects’ manufacturers,” stated Tomas Lopez, Chief Govt Officer of Eviosys. “By combining with Sonoco, we are going to work to carry our prime quality, sustainable and revolutionary packaging options to new and present prospects across the globe. Our corporations share a powerful dedication to offering the very best ranges of customer support, security for our staff, and working efficiencies, and I stay up for becoming a member of the extremely proficient workforce at Sonoco as we work to ship the advantages of this acquisition to all our stakeholders.”
Strategic and Monetary Advantages
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Establishes International Management in Our Core Steel Packaging Enterprise:
The acquisition of Eviosys builds on the 2022 acquisition of Ball Metalpack and generates one other main place in a core enterprise for Sonoco.Combining Eviosys’s main place in EMEA with Sonoco’s present place within the U.S. expands Sonoco’s complete addressable market in steel packaging to roughly $25 billion globally. Sonoco plans to leverage Eviosys’s extremely complementary portfolio to extra successfully serve each new and present prospects and speed up natural progress alternatives in consumer-oriented finish markets. The mixed manufacturing footprint is properly invested with upgraded gear and positioned in shut proximity to key prospects, permitting Sonoco to unlock and drive operational efficiencies.
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Creates Clear and Actionable Synergies:
Sonoco has recognized over $100 million of potential synergies from the optimization of sourcing, provide chain enhancements, uncooked materials procurement financial savings, manufacturing footprint optimization and streamlining SG&A. Nearly all of the synergies are anticipated to be realized within the first yr of possession with the stability realized over the next 12 months.
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Sturdy Worth Creation Profile:
Sonoco expects the Transaction to be instantly accretive to Adjusted EPS and over 25% accretive to 2025 anticipated Adjusted EPS2. Eviosys generates significant working money circulation and professional forma for the transaction Sonoco’s EBITDA minus capital expenditures is predicted to be roughly 40% higher in 2025. The acquisition is predicted to lead to a return on invested capital in extra of Sonoco’s price of capital starting in yr one.
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Sonoco to Advance Portfolio Transformation Technique with Divestitures:
The acquisition of Eviosys is a significant development of our portfolio transformation technique that additionally consists of vital divestitures. Sonoco intends to divest ThermoSafe, its main temperature assured packaging enterprise, in addition to different companies and expects to realize no less than $1 billion of complete proceeds from divestitures within the subsequent twelve to eighteen months. We imagine that these divestitures allow higher strategic readability and operational focus whereas additionally producing proceeds to fund deleveraging and excessive return capital investments in core companies.
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Maintains Sonoco’s Dedication to its Funding Grade Credit score Profile:
Sonoco intends to take care of its funding grade credit standing. Sonoco has structured the financing of the Transaction to align with its strategic precedence of retaining entry to capital and prudent monetary coverage. Sonoco intends to finance the transaction with new debt and the proceeds from an issuance of as much as $500 million in fairness. KPS has agreed to speculate as much as $200 million in Sonoco to help the Transaction by way of the fairness providing. With debt discount from divestitures and money from operations, Sonoco expects to realize web leverage beneath 3.0x inside 24 months of the Transaction.
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Accelerates Sustainability Commitments:
Sonoco and Eviosys’s mixed administration groups are dedicated to accelerating sustainability initiatives for the setting and the communities the place we function. Eviosys additionally advances Sonoco’s portfolio of sustainable options and choices throughout areas and finish markets to help the sustainability wants of our prospects. Sustainability integration shall be a cornerstone of our integration efforts.
Transaction Particulars, Financing, Timing and Approvals
Beneath the phrases of the settlement, Sonoco will purchase Eviosys from KPS for roughly $3.9 billion (€3.615 billion) on a cash-free, debt-free foundation. Sonoco has dedicated financing for the whole lot of the transaction worth.
The Boards of Administrators of each corporations have unanimously authorized the transaction. The Transaction anticipated to happen by the top of 2024, topic to the completion of required works council consultations, the receipt of required regulatory approvals and different customary closing situations.
Eviosys’s present CEO, Tomas Lopez, will stay with Sonoco and lead the Firm’s EMEA steel packaging enterprise.
Advisors
Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are serving as monetary advisors to Sonoco and Freshfields Bruckhaus Deringer LLP is serving as Sonoco’s authorized counsel. Rothschild & Co is appearing as monetary advisor to Eviosys and Paul, Weiss, Rifkind, Wharton & Garrison LLP is appearing as Eviosys’s authorized advisor.
Investor Convention Name Webcast
The Firm will host a convention name to debate the transaction starting at 8:30 am Jap Time immediately, June 24, 2024.
A reside audio webcast of the decision together with supporting supplies shall be accessible on the Sonoco Investor Relations web site at https://investor.sonoco.com/. A webcast replay shall be accessible on the Firm’s web site for no less than 30 days following the decision.
Ahead-Wanting Statements
Statements included herein that aren’t historic in nature, are supposed to be, and are hereby recognized as “forward-looking statements” for functions of the protected harbor supplied by Part 21E of the Securities Change Act of 1934, as amended. As well as, the Firm and its representatives could occasionally make different oral or written statements which can be additionally “forward-looking statements”. Phrases equivalent to “assume”, “imagine”, “dedicated”, “proceed”, “might”, “estimate”, “anticipate”, “targeted”, “future”, “steerage”, “possible”, “could”, “ongoing”, “outlook”, “potential”, “search”, “technique”, “will”, or the unfavourable thereof, and comparable expressions establish forward-looking statements.
Ahead-looking statements on this communication embody statements relating to, however not restricted to: the proposed Acquisition and the timing thereof, together with works council consultations, regulatory approvals and the satisfaction of different closing situations; the anticipated debt profile and money flows of the mixed firm; the professional forma adjusted EBITDA and web leverage of the mixed firm; the anticipated price synergies to be achieved from the proposed Acquisition; statements relating to the Firm’s anticipated future monetary situation and outcomes of operations, together with income Adjusted EPS and Adjusted EBITDA.
Such forward-looking statements are based mostly on present expectations, estimates and projections about our trade, administration’s beliefs and sure assumptions made by administration. Such data consists of, with out limitation, discussions as to steerage and different estimates, perceived alternatives, expectations, beliefs, plans, methods, objectives and goals regarding our future monetary and working efficiency. These statements aren’t ensures of future efficiency and are topic to sure dangers, uncertainties and assumptions which can be troublesome to foretell.
Subsequently, precise outcomes could differ materially from these expressed or forecasted in such forward-looking statements. Dangers and uncertainties embody, amongst different issues: dangers associated to the proposed Acquisition, together with that the proposed Acquisition won’t be consummated; the power to obtain regulatory approvals for the proposed Acquisition in a well timed method, on acceptable phrases or in any respect, or to fulfill the opposite closing situations to the proposed Acquisition; situations within the credit score markets and the power to acquire financing for the proposed Acquisition on a positive foundation if in any respect; the power to retain key staff and efficiently combine Eviosys; our potential to understand estimated price financial savings, synergies or different anticipated advantages of the proposed Acquisition, or that such advantages could take longer to understand than anticipated; diversion of administration’s consideration; the potential impression of the announcement or consummation of the proposed Acquisition on relationships with shoppers and different third events; the operation of recent manufacturing capabilities; the Firm’s potential to realize anticipated price and power financial savings; the supply, transportation and pricing of uncooked supplies, power and transportation, together with the impression of potential modifications in tariffs or sanctions and escalating commerce wars, and the impression of warfare, normal regional instability and different geopolitical tensions (equivalent to the continued battle between Russia and Ukraine in addition to the financial sanctions associated thereto, and the continued battle in Israel and Gaza), and the Firm’s potential to move uncooked materials, power and transportation worth will increase and surcharges by way of to prospects or in any other case handle these commodity pricing dangers; the prices of labor; the results of inflation, fluctuations in client demand, quantity softness, and different macroeconomic elements on the Firm and the industries during which it operates and that it serves; the Firm’s potential to satisfy its environmental and sustainability objectives, together with with respect to greenhouse fuel emissions; and to satisfy different social and governance objectives, together with challenges in implementation thereof; and the opposite dangers, uncertainties and assumptions mentioned within the Firm’s filings with the Securities and Change Fee, together with its most up-to-date experiences on Types 10-Ok and 10-Q, notably beneath the heading “Threat Elements”. The Firm undertakes no obligation to publicly replace or revise forward-looking statements, whether or not because of new data, future occasions or in any other case. In gentle of those dangers, uncertainties and assumptions, the forward-looking occasions mentioned herein won’t happen.
Use of Non-GAAP data
We check with sure non-GAAP monetary measures on this press launch, together with:
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Adjusted earnings per widespread share (“Adjusted EPS”), outlined as GAAP earnings per share adjusted to exclude quantities, together with the related tax results, regarding: restructuring/asset impairment fees; acquisition, integration and divestiture-related prices; positive aspects or losses from the divestiture of companies and different property; losses from the early extinguishment of debt; non-operating pension prices; amortization expense on acquisition intangibles; modifications in last-in, first-out (“LIFO”) stock reserves; sure revenue tax occasions and changes; spinoff positive aspects/losses; different non-operating revenue and losses; and sure different objects, if any.
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Adjusted EBITDA, outlined as web revenue excluding the next: curiosity expense; curiosity revenue; provision for revenue taxes; depreciation, depletion and amortization expense; non-operating pension prices; web revenue/loss attributable to noncontrolling pursuits; restructuring/asset impairment fees; modifications in LIFO stock reserves; positive aspects/losses from the divestiture of companies and different property; acquisition, integration and divestiture-related prices; different revenue; spinoff positive aspects/losses; and different non-GAAP changes, if any, that will come up occasionally.
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Adjusted EBITDA Margin, outlined as Adjusted EBITDA divided by web gross sales.
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Earnings earlier than curiosity, taxes, depreciation, and amortization, or EBITDA of Eviosys.
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Web leverage, which is outlined as complete debt much less money divided by Adjusted EBITDA.
A quantitative reconciliation of the anticipated EBITDA, Adjusted EBITDA and anticipated Adjusted EPS to probably the most straight comparable GAAP measures can’t be supplied with out unreasonable efforts as a result of sure objects could haven’t but occurred or are out of the Firm’s or Eviosys’s management and/or can’t be moderately predicted. As well as, quantitative reconciliations of our full yr 2024 Adjusted EBITDA and Adjusted EPS steerage can’t be supplied because of the possible prevalence of a number of of the next, the timing and magnitude of which we’re unable to reliably forecast with out unreasonable efforts: restructuring prices and restructuring-related impairment fees, acquisition/divestiture-related prices, positive aspects or losses on the sale of companies or different property, and the revenue tax results of these things and/or different revenue tax-related occasions.
These non-GAAP monetary measures aren’t calculated in accordance with, nor are they another for, measures conforming to GAAP, they usually could also be totally different from non-GAAP monetary measures utilized by different corporations. As well as, these non-GAAP monetary measures aren’t based mostly on any complete set of accounting guidelines or ideas.
The Firm presents these non-GAAP monetary measures to supply traders with data to judge Sonoco’s working ends in a way just like how administration evaluates enterprise efficiency. The Firm constantly applies its non-GAAP monetary measures introduced herein and makes use of them for inside planning and forecasting functions, to judge its ongoing operations, and to judge the final word efficiency of administration and every enterprise unit in opposition to plans/forecasts. As well as, these identical non-GAAP monetary measures are utilized in figuring out incentive compensation for the whole administration workforce and in offering earnings steerage to the investing group.
Materials limitations related to using such measures embody that they don’t mirror all interval prices included in working bills and will not be comparable with equally named monetary measures of different corporations. Moreover, the calculations of those non-GAAP monetary measures are based mostly on subjective determinations of administration relating to the character and classification of occasions and circumstances that the investor could discover materials and consider in a different way.
To compensate for any limitations in such non-GAAP monetary measures, we imagine that it’s helpful in evaluating outcomes to assessment each GAAP data, which incorporates the entire objects impacting monetary outcomes, and the associated non-GAAP monetary measures that exclude sure parts, as described above. Additional, Sonoco administration doesn’t, nor does it recommend that traders ought to, think about any non-GAAP monetary measures in isolation from, or as an alternative choice to, monetary data ready in accordance with GAAP.
This press launch is neither a suggestion to promote nor a solicitation of a suggestion to purchase any securities of the Firm. Any such provide will solely be made pursuant to a prospectus filed with the SEC.
About Sonoco:
With web gross sales of roughly $6.8 billion in 2023, Sonoco has roughly 22,000 staff working in additional than 300 operations around the globe, serving a few of the world’s best-known manufacturers. With our company objective of Higher Packaging. Higher Life., Sonoco is dedicated to creating sustainable merchandise and a greater world for our prospects, staff, and communities. Sonoco was named considered one of America’s Most Accountable Corporations by Newsweek. For extra data on the Firm, go to our web site at www.sonoco.com.
About Eviosys
Eviosys is a number one world provider of steel packaging, producing meals cans and ends, aerosol cans, steel closures and promotional packaging to protect the merchandise of tons of of client manufacturers. Eviosys has the biggest manufacturing footprint in Europe, the Center East and Africa (EMEA) with 6,300 staff in 44 manufacturing amenities throughout 17 international locations within the area. In 2023, it generated €2.41 billion in income. Eviosys is a portfolio firm of KPS Capital Companions, LP.
About KPS Capital Companions, LP
KPS, by way of its affiliated administration entities, is the supervisor of the KPS Particular Conditions Funds, a household of funding funds with roughly $21.6 billion of property beneath administration (as of March 31, 2024). For over three a long time, the Companions of KPS have labored completely to understand vital capital appreciation by making controlling fairness investments in manufacturing and industrial corporations throughout a various array of industries, together with fundamental supplies, branded client, healthcare and luxurious merchandise, automotive elements, capital gear and normal manufacturing. KPS creates worth for its traders by working constructively with proficient administration groups to make companies higher, and generates funding returns by structurally enhancing the strategic place, competitiveness and profitability of its portfolio corporations, moderately than primarily counting on monetary leverage. The KPS Funds’ portfolio corporations at present generate combination annual revenues of roughly $19.6 billion, function 223 manufacturing amenities in 26 international locations, and have roughly 47,000 staff, straight and thru joint ventures worldwide (as of March 31, 2024). The KPS funding technique and portfolio corporations are described intimately at www.kpsfund.com.
Contact Data
Traders
Lisa Weeks
Vice President of Investor Relations & Communications
[email protected]
843-383-7524
Media
FGS International
[email protected]
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1 Based mostly on FactSet estimates at 4:00 pm ET on 6/21/24
2 Based mostly on FactSet estimates at 4:00 pm ET on 6/21/24
