Sonoco Products Co. is selling off a plastics-related business in conjunction with the company's deeper push into the metal containers business.
Update Sept. 5, 2024: Sonoco puts thermoforming, flexible packaging business in play
The Hartsville, S.C.-based company said June 24 the ThermoSafe line of business, which uses plastics in a variety of ways to create shipping packaging for products that require cold temperature control, is on the market.
The company wants to raise money to help offset the $3.9 billion cost to acquire Eviosys, a metal food can, ends and closures maker in Europe, from KPS Capital Partners.
But while Sonoco is looking to divest, Sonoco officials also indicated they expect a premium for ThermoSafe.
"It's really a great innovation company with a high service model and one that is in a really unique growth market. We think this an opportunity to unlock some value for Sonoco shareholders by selling that business and assuring the right owners have it. It's a very profitable business with a great growth market. We expect to receive value for that," Sonoco Chief Financial Officer Rob Dillard said.
Sonoco did not put a price on ThermoSafe during a conference call to discuss the Eviosys deal June 24, but the company did say it is looking to potentially raise at least $1 billion overall in divestitures during the next 12 to 18 months.
While consumers might be familiar with ThermoSafe's expanded polystyrene containers shipped in corrugated boxes to homes for the delivery of medicines, the company also makes much larger products, including pallet-sized systems for bulk shipments.
ThermoSafe additionally has a line of insulated rigid containers, capable of holding up to 1,450 pounds, made from double-walled polyethylene filled with urethane foam insulation for dry ice and industrial applications. Other items use gel packs and rigid bottles that can be frozen to maintain cool temperatures, bags and containers, according ThermoSafe's web site.
Sonoco's decision to purchase Eviosys and sell ThermoSafe comes after the company previously decided to focus on four key markets, including thermoformed and flexible plastic packaging, metal packaging, rigid paper containers and industrial packaging.
"We'll use the proceeds from the divestitures to deleverage," CEO Howard Coker said. "We're funding the transaction with debt and equity and intend to maintain an investment grade credit rating. This transaction advances our portfolio's transformation strategy."
"We've been on a transformation journey to becoming a growth company," he said. "We've taken clear and actionable steps towards that goal."
KPS acquired what became Eviosys for approximately $2.7 billion in April 2021 from Crown Holdings Inc.