Sealed Air Corp.'s attraction to Liqui-Box Holdings Inc. is not confined to the bags and boxes used in the company's well-known bag-in-box packaging approach.
Liqui-Box, which has been around for more than 60 years, is well known for the company's products that hold liquids in plastic bags that are then stored in paper containers.
Once the product is used, the empty bags take up much less space than rigid containers and the exterior paper containers can be broken down for storage and transportation. Those are important considerations with the ever-growing focus on sustainability.
Another important consideration in acquiring Liqui-Box, Sealed Air CEO Edward Doheny said, is the company's extensive business in the attachments to bags.
"Liqui-Box brings us valuable new capabilities with its expertise in fitments and dispensers portfolio that are highly complementary," he said on a conference call to discuss the transaction.
Liqui-Box's fitments and dispensing unit business, on a unit basis, is actually larger than the company's plastic bag business. That's the opposite of what's now on offer at Sealed Air.
"You have a bag, you have a box and you have a fitting. So we do on the bags on the fluid side, we do roughly 1.5 billion bags. We do less than 10 million fitments," Doheny said about Sealed Air. "Liqui-Box is inverted. They do hundreds of millions of bags. But they do over 1 billion fitments. Their secret sauce is those fitments on how you actually dispense the liquid from the box."
Liqui-Box also makes other bags and films, liners used in restaurants for beverage urns, bottles, equipment and liners for intermediate bulk containers.
Liqui-Box, based in Richmond, Va., was founded in 1961 and has about 1,400 employees at 18 global locations. Sales for this year is expected to come in at $362 million. Sealed Air does business in 114 countries and has 16,500 employees.
Liqui-Box will be folded into Charlotte, N.C.-based Sealed Air's Cryovac Fluids & Liquids business.
Fluids and liquids have been the fast-growing and most-profitable area for Cryovac, growing more than 30 percent year to date, Doheny said.
"Liqui-Box increases our exposure to attractive end markets like consumer packaging goods, wine and spirits, quick-service restaurants, and enables us to create a new platform when combined with Cryovac," Doheny said.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, at Liqui-Box are expected to be $85 million this year, and Sealed Air expects to save $30 million in annual costs within three years by combining operations. The purchase price of $1.15 billion represents an EBITDA multiple of 13.5, which drops to 10 times after cost savings, Sealed Air said.
The transaction is subject to regulatory approval and is slated to close during the first quarter of 2023, Sealed Air said. Olympus Partners acquired Liqui-Box Holdings Inc. in October 2015.
Sealed Air is maybe best known for the company's Bubble Wrap and Cryovac brands, but the company has a deep roster of plastics packaging products and machinery and posted sales of some $5.5 billion in 2021.