Sonoco Products Co. is acquiring thermoformer Peninsula Packaging Co. LLC in a $230 million all-cash deal.
The move nearly doubles Sonoco's thermoforming business.
Peninsula, owned by Odyssey Investment Partners LLC, makes fresh fruit and vegetable packaging found in grocery stores.
Exeter, Calif.-based Peninsula has five manufacturing sites and estimates its 2016 proforma sales at $190 million. That includes projected full-year sales from a new operation in Mexico that started in mid-year 2016.
“Our goal has been to strategically expand our consumer packaging portfolio to grow our offerings in both the center of the store and the fast growing perimeter,” Sonoco CEO Jack Sanders said in a statement.
“With the addition of Peninsula, Sonoco will nearly double its thermoforming packaging capabilities and occupy a strong packaging position serving the perimeter in fresh food products, combined with our existing offerings in the center of the store, including those serving a range of frozen and shelf-stable foods,” he continued.
Peninsula's business is based on using recycled PET bottles to serve as a feedstock for its new thermoformed packaging.
“We are the largest single user of recycled washed bottle flake in North America, converting this material into food-contact quality products for re-use by our customers,” the company says on its website. Sonoco, based in Hartsville, S.C., also has a recycling division.
Peninsula uses 70 million pounds of recycled PET each year, the company said.
Peninsula also noted that it operates one of the largest private solar panel farms in North America next to its Exeter location. That site produces up to 1 megawatt of power each day.
Sonoco's push further into thermoforming comes at a time when the perimeter of grocery stores — where fresh food is typically displayed — is growing in consumer popularity.
The purchase positions Sonoco to capture growth in the fresh and natural category and allows the company to offer a wider array of packaging, Sonoco said.
Christopher Manuel, a senior analyst with Wells Fargo Securities, called the acquisition “a nice fit, and at a reasonable price” for Sonoco. He estimated the purchase price at 8 to 8.5 times earnings before interest, taxes, depreciation and amortization.
Peninsula, which had actual 2016 sales of $175 million, has production facilities in Yakima, Wash.; Hollister and Exeter, Calif.; and Wilson, N.C., as well as a new facility opened last year in El Salto, Mexico. The company's products include hinged containers, bases, lids and domes for primary markets including berries, packaged salads and cut vegetables. It employs 700 and has 36 thermoforming machines.
Sonoco has 13 thermoforming plants and thermoforming sales of $270 million, according to Plastics News estimates.
The deal is expected to close in the second quarter.