Sonoco Products Co. continues to expand its thermoforming portfolio, this time through a deal with ESCO Technologies Inc.
Hartsville, S.C.-based Sonoco has a definitive agreement to acquire ESCO's technical packaging business. That segment includes Thermoform Engineered Quality LLC and Plastique.
ESCO, based in St. Louis, reported the company expects to receive gross cash proceeds of $187 million subject to typical post-closing adjustments. Sales for the acquired operations were $87 million in fiscal 2018.
TEQ makes pharmaceutical, medical and consumer packaging. The company is headquartered in Huntley, Ill., where it also has operations. TEQ has another plant in Fremont, Ind.
Plastique, which makes both plastic and molded paper fiber packaging, has plants in Nottingham, England, and Poznan, Poland.
Rob Tiede, CEO at Sonoco, points to a growing global health care packaging market already worth a reported $33 billion as a reason to make the deal.
"Increased life expectancy, the steady introduction of new products from medical device manufacturers and pharmaceutical companies, combined with requirements for improved safety and compliance, are driving market growth," he said in a statement.
"TEQ provides a strong platform to further expand Sonoco's growing health care packaging business," Tiede said in his statement.
For ESCO, CEO Vic Richey said the move "streamlines our business, simplifies our portfolio and allows us to focus on our three core operating segments."
ESCO's three main businesses are in filtration and fluid flow, radio frequency shielding and testing, and diagnostic testing for the electric power grid.
Net proceeds from the sale will be used to pay down debt, which will improve ESCO's financial footing and allow for future potential acquisitions in its core businesses, the company said.
Sonoco, a $5 billion firm, sees thermoformed plastics as a growth industry for the company with a broad portfolio of consumer, industrial and protective packaging products. Sonoco has more than 300 locations in 33 countries that provide products for customers in 85 countries.
The companies expect the deal to close by the end of this year and start adding to Sonoco's earnings next year. The acquired operations will be tucked into Sonoco's consumer packaging business.
TEQ acquired the Fremont business in 2015 and Plastique in 2016. ESCO's technical packaging division produced 11 percent of the company's total sales in 2018, 12 percent in 2017 and 13 percent in 2016, according to the firm's annual report.
