One of America's largest thermoforming businesses could come on the market as part of Sonoco Products Co.'s larger consideration of the company's overall business.
The Hartsville, S.C.-based company "has initiated a review of strategic alternatives" for the firm's thermoformed and flexible packaging business, a part of Sonoco's consumer packaging operations.
The TFP segment serves the food, retail and medical markets providing packaging for products such as snacks, condiments, prepared meals, fresh food, coffee and pet products.
TFP operations accounted for $1.3 billion in sales in 2023, and divestiture of the business could help finance an earlier announced deal to move deeper into metal containers.
Sonoco is No. 5 in the most recent Plastics News ranking of thermoformers in North America with annual sales of $700 million in the region. It is No. 45 in PN rankings of film and sheet processors in North America.
Sonoco is a multinational company producing a wide range of consumer packaging, industrial products, protective packaging and healthcare. Total annual sales were $6.8 billion. The company uses paper, metal and plastics to make new products. The company also has a recycling division that handles nearly 3 million tons of material each year, including paper, metal and plastics.
CEO Howard Coker specifically mentioned the opportunity to invest more in both the paper and metal segments.
"We continue our strategy of focusing on fewer bigger businesses and investing to deploy our differentiated operating model. We expect that this next step will accelerate our strategy and further drive improved results," Coker said in a statement.
"We are excited about the opportunities we have to invest in and improve our industrial paper products, rigid paper containers, and metal packaging businesses. These businesses have improved meaningfully since we initiated this strategy, and we believe we will achieve even greater returns with this more focused portfolio," he said.
Sonoco indicated "exploring alternatives for the TFP business" would accelerate efforts to simplify the company's portfolio, improve debt levels and increase shareholder value.
The potential to sell off the TFP business to raise money also has Sonoco taking a different financing approach for the previously announced acquisition of Eviosys, a maker of metal containers and aerosol containers for $3.9 billion from KPS Capital Partners.
Sonoco now will pay for that deal through debt, longer-term bond financing and cash. The company will no longer issue stock to help pay for the transaction.
It previously put up its ThermoSafe temperature control shipping packaging division up for sale as part of its Enviosys acquisition plan.