Sonoco Products Co.'s acquisition of Weidenhammer Packaging Group GmbH of Germany includes plastic packaging technology that the company is targeting for growth in the United States.
The $383 million deal, naturally, features plenty of talk about the paper packaging aspects of both companies. That's the bulk of their respective businesses.
But the move also includes Weidenhammer Plastic Packaging with a plant in Zwenkau, Germany, near Leipzig, that includes production of cups, cans and containers with volumes of at least 100 milliliters. Buckets made there range from 1 to 11.4 liters.
Polypropylene, according to Weidenhammer, “is virtually the only raw material used.”
“Weidenhammer is a leader in thin-walled injection molded containers that utilize in-mold labeling. Production of this thin-wall package should grow to approximately $20 million in annual sales by the end of 2015,” Sonoco CEO M. Jack Sanders said on a conference call Aug. 25 to discuss the deal.
“And we believe there's significant opportunities to grow this technology in the U.S.,” he said.
Overall, Sonoco gains 13 locations, including five in Germany. There also are also sites in Kansas City, Mo., as well as Belgium, Chile, France, Greece, the Netherlands, Russia and United Kingdom, Sonoco said.
Approximately 1,100 employees will come over to Hartsville, S.C.-based Sonoco in the deal expected to close during the fourth quarter.
Weidenhammer, a family owned business based in Hockenheim, expects sales of approximately $327 million this year. That compares with Sonoco's $4.9 billion in annual sales.
“The decision to sell our shares was not an easy one,” CEO Ralf Weidenhammer said in a statement. "However, we are convinced that the merger is the right step at the right time, and that it will open up new and important future perspectives to WPG and its employees."
Weidenhammer markets the PermaSafe line of containers that the company touts as a plastic replacement for metal food cans and glass jars that is easier to handle, lighter and more cost effective.
One stock analyst, on the conference call, asked company officials why they are optimistic about the thin-walled plastics portion of the Weidenhammer business.
Sanders pointed to the high-barrier and in-mold labeling properties of Weidenhammer's container business. “That opens up a new series of markets that traditionally that's not been applicable,” he said.
