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Sonoco (SON) to Buy Eviosys to Boost Metal Packaging Business
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Sonoco Products Company (SON - Free Report) has announced that it has agreed to buy Eviosys, Europe’s leading manufacturer of food cans, ends and closures, from KPS Capital Partners for approximately $3.9 billion. This buyout will strengthen SON’s metal core metal packaging business and global presence while enhancing sustainability efforts. The company has identified more than $100 million of synergies that are expected to be realized within two years of closing.
The transaction has been approved by the board of directors of both companies. It is expected to be finalized by the end of 2024, subject to the receipt of regulatory approvals and fulfillment of other customary closing conditions. Sonoco intends to finance the deal with new debt and the proceeds from an issuance of up to $500 million in equity.
Eviosys: A Strategic Fit
Eviosys is a leading global supplier of metal packaging, producing food cans and ends, aerosol cans and metal closures. With 44 facilities spread across 17 countries, the company boasts the largest metal food can manufacturing footprint in the EMEA region. Combining this with Sonoco’s established presence in the United States will expand the company’s total addressable market in metal packaging to approximately $25 billion globally.
The addition of Eviosys’ highly complementary portfolio will help Sonoco expand its customer base and open up organic growth opportunities in consumer-oriented end markets. It will also boost Sonoco’s innovation and sustainability efforts.
Synergies and Financial Benefits
Eviosys’ revenues for 2024 are projected at around $2.5 billion while adjusted EBITDA is estimated at approximately $430 million. Sonoco expects that the integration will likely result in more than $100 million of synergies. This will be realized through the optimization of sourcing, supply-chain improvements, raw material procurement savings, manufacturing footprint optimization and streamlining SG&A. The majority of the synergies are expected to be realized in the first year of ownership with the balance realized in the following year.
The buyout will be immediately accretive to Sonoco’s adjusted earnings per share. In 2025, it is expected to contribute 25% to Sonoco’s adjusted earnings per share.
Acquisition to Aid Portfolio Transformation Strategy
The acquisition of Eviosys is in sync with Sonoco’s strategy to focus on its core businesses and invest in high-return opportunities, both organically and inorganically. It is expected to result in a return on invested capital higher than Sonoco’s cost of capital beginning in the first year. The Eviosys’ acquisition builds on SON’s 2022 acquisition of Ball Metalpack, a producer of sustainable metal packaging for food and household products and aerosol products for $1.35 billion.
Sonoco stated that it intends to divest ThermoSafe, its leading temperature-assured packaging business, along with other non-core businesses to advance its portfolio transformation strategy. The company expects at least $1 billion of total proceeds from these actions over the next 12 to 18 months.
Price Performance
SON shares have dipped 3.7% in the past year against the industry’s 11.2% growth.
The Zacks Consensus Estimate for Kaiser Aluminium’s 2024 earnings is pegged at $4.12 per share, which indicates year-over-year growth of 50.4%. The consensus estimate for earnings has gone up 15% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 137%. KALU shares have gained 30% in the past year.
The consensus estimate for Zebra Technologies’ 2024 earnings is pegged at $12.11 per share. The consensus estimate for earnings has moved up 9% in the past 60 days. The estimate indicates year-over-year growth of 23%. The company has a trailing four-quarter average earnings surprise of 8.56%. ZBRA shares have gained 10% in a year.
The Zacks Consensus Estimate for Brady’s 2024 earnings is pegged at $4.13 per share, which indicates year-over-year growth of 13.5%. The consensus estimate has moved up 3% in the past 30 days. The company has a trailing four-quarter average earnings surprise of 6.7%. BRC shares have gained 39% in the past year.
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Sonoco (SON) to Buy Eviosys to Boost Metal Packaging Business
Sonoco Products Company (SON - Free Report) has announced that it has agreed to buy Eviosys, Europe’s leading manufacturer of food cans, ends and closures, from KPS Capital Partners for approximately $3.9 billion. This buyout will strengthen SON’s metal core metal packaging business and global presence while enhancing sustainability efforts. The company has identified more than $100 million of synergies that are expected to be realized within two years of closing.
The transaction has been approved by the board of directors of both companies. It is expected to be finalized by the end of 2024, subject to the receipt of regulatory approvals and fulfillment of other customary closing conditions. Sonoco intends to finance the deal with new debt and the proceeds from an issuance of up to $500 million in equity.
Eviosys: A Strategic Fit
Eviosys is a leading global supplier of metal packaging, producing food cans and ends, aerosol cans and metal closures. With 44 facilities spread across 17 countries, the company boasts the largest metal food can manufacturing footprint in the EMEA region. Combining this with Sonoco’s established presence in the United States will expand the company’s total addressable market in metal packaging to approximately $25 billion globally.
The addition of Eviosys’ highly complementary portfolio will help Sonoco expand its customer base and open up organic growth opportunities in consumer-oriented end markets. It will also boost Sonoco’s innovation and sustainability efforts.
Synergies and Financial Benefits
Eviosys’ revenues for 2024 are projected at around $2.5 billion while adjusted EBITDA is estimated at approximately $430 million. Sonoco expects that the integration will likely result in more than $100 million of synergies. This will be realized through the optimization of sourcing, supply-chain improvements, raw material procurement savings, manufacturing footprint optimization and streamlining SG&A. The majority of the synergies are expected to be realized in the first year of ownership with the balance realized in the following year.
The buyout will be immediately accretive to Sonoco’s adjusted earnings per share. In 2025, it is expected to contribute 25% to Sonoco’s adjusted earnings per share.
Acquisition to Aid Portfolio Transformation Strategy
The acquisition of Eviosys is in sync with Sonoco’s strategy to focus on its core businesses and invest in high-return opportunities, both organically and inorganically. It is expected to result in a return on invested capital higher than Sonoco’s cost of capital beginning in the first year. The Eviosys’ acquisition builds on SON’s 2022 acquisition of Ball Metalpack, a producer of sustainable metal packaging for food and household products and aerosol products for $1.35 billion.
Sonoco stated that it intends to divest ThermoSafe, its leading temperature-assured packaging business, along with other non-core businesses to advance its portfolio transformation strategy. The company expects at least $1 billion of total proceeds from these actions over the next 12 to 18 months.
Price Performance
SON shares have dipped 3.7% in the past year against the industry’s 11.2% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Sonoco currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are Kaiser Aluminum (KALU - Free Report) , Zebra Technologies (ZBRA - Free Report) and Brady (BRC - Free Report) . While KALU and ZBRA sport a Zacks Rank #1 (Strong Buy), BRC carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Kaiser Aluminium’s 2024 earnings is pegged at $4.12 per share, which indicates year-over-year growth of 50.4%. The consensus estimate for earnings has gone up 15% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 137%. KALU shares have gained 30% in the past year.
The consensus estimate for Zebra Technologies’ 2024 earnings is pegged at $12.11 per share. The consensus estimate for earnings has moved up 9% in the past 60 days. The estimate indicates year-over-year growth of 23%. The company has a trailing four-quarter average earnings surprise of 8.56%. ZBRA shares have gained 10% in a year.
The Zacks Consensus Estimate for Brady’s 2024 earnings is pegged at $4.13 per share, which indicates year-over-year growth of 13.5%. The consensus estimate has moved up 3% in the past 30 days. The company has a trailing four-quarter average earnings surprise of 6.7%. BRC shares have gained 39% in the past year.