Sonoco, a sustainable packaging company, has launched a strategic review process to explore alternatives for its Thermoformed & Flexible Packaging (TFP) business.
This move aims to simplify Sonoco’s portfolio, improve leverage, and increase shareholder value.
TFP is part of the company’s Consumer Packaging segment and provides products to a diverse customer base across the food, retail, and medical sectors.
The business generated $1.3bn in revenue in 2023.
Sonoco president and CEO Howard Coker said: “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.
“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.”
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By GlobalData
With the review of TFP, the company has revised its financing approach for the $3.9bn Eviosys acquisition plan.
Sonoco now plans to use a mix of prepayable debt, long-term bond financing, and cash reserves to fund the Eviosys acquisition.
This change negates the need for equity issuance to finance the Eviosys deal.
Sonoco expects to cut net leverage more than previously estimated within 24 months of this transaction.
The process is expected to conclude by the fourth quarter (Q4) of 2024.
Earlier this month, Sonoco reported that its net sales for Q2 of financial year 2024 (FY24) declined by 5% to $1.62bn compared to $1.70bn in the same period of FY23.
