HARTSVILLE, S.C. - Sonoco Products Company (NYSE: NYSE:SON), a global packaging firm, announced today its agreement to purchase Eviosys, a European leader in metal packaging. The $3.9 billion transaction is part of Sonoco's strategy to enhance its core businesses and invest in high-return opportunities.
The acquisition is expected to position Sonoco as a global frontrunner in the metal food can and aerosol packaging industry, complementing its 2022 acquisition of Ball (NYSE:BALL) Metalpack. Eviosys, known for its sizable footprint in the Europe, Middle East, and Africa (EMEA) region, is anticipated to generate $2.5 billion in 2024 revenues and $430 million in adjusted EBITDA.
Sonoco's COO, Rodger Fuller, is set to steer the integration, aiming to realize over $100 million in synergies within two years. These synergies will stem from sourcing optimization, supply chain improvements, and other operational efficiencies. The deal is projected to be immediately accretive to Sonoco's adjusted earnings per share (EPS) and significantly enhance its 2025 adjusted EPS.
In line with the acquisition, Sonoco plans to divest its ThermoSafe business and other assets, targeting at least $1 billion from these sales. The proceeds are earmarked for debt reduction and investments in core areas. The company maintains its objective to keep an investment-grade credit rating and intends to reduce leverage to below 3.0x within two years.
The acquisition also supports Sonoco's sustainability goals, with both companies focused on advancing sustainable packaging solutions. Eviosys's CEO, Tomas Lopez, will continue to lead the EMEA metal packaging operations post-transaction.
Subject to regulatory approvals and customary closing conditions, the deal is slated for completion by year-end. Sonoco has secured committed financing for the entire transaction amount.
This move is a significant step in Sonoco's portfolio transformation strategy, aiming to provide enhanced value to customers and shareholders.
The information in this article is based on a press release statement.
InvestingPro Insights
In light of Sonoco Products Company's (NYSE: SON) strategic acquisition of Eviosys, the company's financial metrics and market performance offer valuable insights. With a market capitalization of $5.46 billion and a trailing P/E ratio of 12.98, Sonoco demonstrates a robust financial standing. The acquisition is set to complement Sonoco's existing operations, potentially enhancing its market position and revenue streams, which as of the last twelve months as of Q1 2024, stood at $6.689 billion despite a slight decline in revenue growth.
A key highlight from the InvestingPro Tips is Sonoco's impressive track record of raising its dividend for 41 consecutive years, underscoring its commitment to shareholder returns. This is particularly noteworthy for investors seeking stable income, as the company's dividend yield currently stands at 3.74%. Additionally, the stock's low price volatility could appeal to investors looking for a less risky portfolio addition.
Moreover, analysts have taken note of the company's strong free cash flow yield, suggesting that Sonoco is generating a healthy amount of cash relative to its share price. This could be a positive signal for investors considering the company's ability to sustain and grow its dividend payments, as well as invest in future growth opportunities.
For those interested in a deeper dive into the company's performance and future prospects, InvestingPro offers additional tips on Sonoco. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further valuable insights to inform their investment decisions.
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