Transcontinental Inc. plans to sell its paper and woven polypropylene packaging operations to Hood Packaging Corp. for US$180 million.
Montreal-based Transcontinental, which does business as TC Transcontinental, announced Nov. 27 that the companies had reached a definitive agreement. The deal is scheduled to close in the first quarter of 2020.
Transcontinental said the operations generated sales of US$215 million in the fiscal year that ended Oct. 27.
Burlington, Ontario-based Hood Packaging makes plastic film and bags, woven PP bags, coated and laminated materials and paper packaging. The company employs about 2,000 and is a wholly owned subsidiary of Hood Co. Inc.
The deal with Hood is related to Transcontinental's 2018 purchase of Coveris Holdings SA's Americas unit for $1.3 billion.
"When we acquired Coveris Americas, we welcomed all of their assets and broad portfolio of products," Transcontinental President and CEO François Olivier said in a news release. "After operating the paper business for almost 18 months, we concluded that it is less core to our packaging sector's growth strategy. As such, our decision to sell these assets is aligned with our plan to continue building our flexible packaging platform where we see good growth potential.
"In addition, this transaction will enable us to deleverage our balance sheet faster than expected and give us the flexibility to continue acquiring businesses that are more complementary to our existing flexible packaging portfolio."
The Coveris deal was transformational for Transcontinental, increasing its number of flexible packaging facilities from seven to 28. That compares to just two facilities in 2014 and five in 2016.
Now Hood Packaging will acquire paper packaging operations and buildings in Sibley, Iowa; Hanford, Calif.; Hazleton, Pa.; and Tifton, Ga. Hood Packaging is also acquiring paper and woven PP operations in Spartanburg, S.C., Transcontinental will retain ownership of that building, which also manufactures plastic flexible packaging.
About 415 employees will transfer to Hood Packaging after the deal closes.
Transcontinental was No. 32 in the most recent Plastics News ranking of North American film and sheet manufacturers, and Hood ranked No. 40.