Contego Cartons in takeover

- Deal enhances Graphic Packaging's position in Europe by growing its operating footprint, expanding into new markets and providing new opportunities for growth

 

- Deal expected to generate $8-$10 million of synergies over next two years

 

Graphic Packaging Holding Company has signed an agreement to acquire Contego Cartons, a leading food and consumer product packaging company based in the UK. Contego is owned by Platinum Equity.

 

Graphic Packaging, headquartered in Marietta, Georgia, is a provider of packaging solutions for a wide variety of products to food, beverage and other consumer products companies. 

 

The company is one of the largest producers of folding cartons and holds a leading market position in coated-unbleached kraft, coated-recycled boxboard multi-wall bag and specialty packaging. Its customers include some of the most widely recognized companies in the world.

 

Under the terms of the transaction, Graphic Packaging will pay approximately £71 million in cash and assume approximately £10 million in other net liabilities in an all cash transaction to be funded with existing cash and debt under the company's current revolving line of credit.

 

Contego Cartons operates three folding carton facilities that convert approximately 150,000 tons of paperboard annually into folding cartons for the food and consumer product industries.

 

Two of Contego Carton's facilities are located in the UK while the third facility is in the Netherlands. 

 

The acquisition is subject to standard closing requirements and is expected to close in late December.

 

Contego had sales of approximately US$260 million and EBITDA of nearly US$19 million in the previous year.

 

Graphic Packaging said the deal gives it a leading position in the European food and consumer products folding carton market, and enhances its position in Europe by growing its operating footprint, expanding into new markets and providing new opportunities for growth. The combination of Graphic Packaging's existing beverage carton business with Contego's food and consumer products carton business creates a new diversified platform.

 

Nicholas Mockett of Moorgate Capital, who advised on the transaction, said: 'Contego Cartons is a European leader in high-quality food and spirits packaging.

 

'Graphic Packaging is number one in the US, and this acquisition will strengthen its ability to look after famous names in the FMCG segment on this side of the Atlantic.'

 

Graphic Packaging added that it expects to generate $8-$10 million of synergies over the next two years and be accretive to earnings in the first full year after integration.

 

David Scheible, Graphic Packaging's president and chief executive officer, said: ‘We are excited about the acquisition of Contego's food and consumer carton business as it extends Graphic Packaging into new end markets, expands the company's global footprint and provides new opportunities for growth.

 

‘Contego operates throughout Western Europe with state of the art facilities in the UK and the Netherlands. 

 

‘Combining Graphic's current European business focused in the beverage markets with Contego's strong market share position in the European food and consumer products markets will allow us to broaden our customer base and enhance our competitive positioning.

 

‘Similar to our strategy in the US, we are committed to growing our European business around food and beverage markets and optimizing our supply chain footprint around our customers' needs.

 

‘There are solid synergies in this combination and we believe the Contego Cartons acquisition is an important step in strengthening our competitive positioning in Europe.’

 

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