Aseptic carton maker SIG Combibloc Group Ltd. is acquiring Scholle IPN Corp., a bag-in-box and spouted pouch company, in a deal that expands the combined company's geography, product offerings and sustainability, the new owner said.
The 1.36 billion euro ($1.54 billion) purchase brings the world's largest bag-in-box maker, as well as the world's second-largest spouted pouch maker, into SIG's fold.
"We started talking to Scholle IPN last year as we were interested in technology collaboration in a number of areas. In course of these discussions, we identified additional areas of collaboration and joint opportunities," SIG CEO Samuel Sigrist said in an online presentation to discuss the transaction. "This led to the conversation that combining the many similarities and the attractive complementaries between the two businesses is highly compelling."
SIG's purchase includes assumption of a cash payment of 370 million euros ($418 million), stock valued at 680 million euros ($768 million) and assumption of 310 million euros ($350 million) in debt, SIG said. A euro was worth $1.13 on Feb. 1, the day the purchase was revealed.
Scholle IPN owner Laurens Last will become SIG's largest shareholder after the deal closes with 9.1 percent of the company, or 33.75 million shares, SIG Chief Financial Officer Frank Herzog said during the presentation. Last also can receive up to an additional 89 million euros ($100 million) per year from 2023 to 2025 based on company performance.
"The two companies share a focus on innovation and sustainability," Last said during the online presentation. "Together we will make even faster progress on sustainability."
The combined company, with customers on six continents, will have nearly 8,000 employees and 69 manufacturing and sales locations around the world. Capabilities include film extrusion, injection molding, renewable paper substrates and filling equipment.
A portion of the presentation centered around the combined company's ability to create more sustainable packaging, with a particular focus on eliminating aluminum as a layer in the multimaterial packaging. Aluminum is used in both aseptic cartons and pouches as a barrier but presents problems for recyclers. Last said his company's product portfolio is now largely aluminum-free.
Ross Bushnell will remain CEO of Northlake, Ill.-based Scholle IPN as it becomes a division of SIG of Neuhausen, Switzerland.
"Collectively, we have this incredibly sustainable lineup and we're working hard to develop that even further. The two companies have a mindset that says we want to be that sustainable leader in packaging on a global scale, at least as it pertains to liquids. That's exactly where we are going to aim our resources, our R&D and our innovation," he said in a Feb. 3 interview.
The two companies' manufacturing footprints also are complementary, he said.
"It also has a great geographic overlay. Our biggest market and our biggest presence in the United States and that's frankly not an area where they have a huge presence. They have a tremendous base in the Middle East and Africa; we really don't. They are very strong in Southeast Asia. We have a presence there, but there's opportunities," Bushnell said. "The same is true in reverse with our Indian business and our Russian business."
Scholle IPN brings 16 locations in 11 countries and 2,100 employees to SIG. The company, with 474 million euros ($536 million) in annual sales, will represent about 18 percent of the combined company, SIG said in the presentation.
"The global footprint of the two businesses is very complementary. I'm excited at the prospect of bring the Scholle IPN portfolio to more markets," Last said.
SIG's product line of food and beverage cartons expands to include bag-in-box and spouted pouch offerings for retail, institutional and industrial customers. Scholle IPN's product lines include barrier films, ergonomic fitments, and filling and sealing equipment for bag-in-box and pouch applications.
The deal is expected to close before the end of the third quarter.