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Transcontinental to acquire Coveris For $1.7 billion

Transcontinental Inc. this morning announced an agreement to acquire Coveris Americas for C$1.72 billion, subject to customary closing adjustments, in the Montreal company’s continuing push to become a North American leader in flexible packaging. Coveris Americas is a business held by Coveris Holdings S.A., a portfolio company of Sun Capital Partners.

The acquisition, which remains subject to closing conditions and receipt of applicable antitrust approvals, has been approved by the boards of directors of both TC Transcontinental and Coveris Americas. The acquisition is expected to be completed in the third quarter of TC Transcontinental’s fiscal year 2018.

Since entering the market in 2014, this is TC Transcontinental’s seventh flexible packaging acquisition,  including its March 2018 purchase of Multifilm Packaging Corporation.

Coveris Americas, explains Transcontinental, is one of the Top 10 converters of flexible packaging and other value-added products in North America based on revenues for its fiscal year ended December 31, 2017. Headquartered in Chicago, Illinois, Coveris Americas manufactures a variety of flexible plastic and paper products, including rollstock, bags and pouches, coextruded films, shrink films, coated substrates and labels.

As of December 31, 2017, Coveris Americas operated 21 production facilities worldwide, primarily in the Americas, the United Kingdom and Australasia. Coveris Americas has over 3,100 employees, the majority of whom are located in the Americas. For its fiscal year ended December 31, 2017, Coveris Americas generated US$966 million in revenues and US$128 million in Adjusted EBITDA.

“Today’s announcement marks a turning point in TC Transcontinental’s 42-year history. This transaction crystallizes our strategic shift toward flexible packaging and solidifies our commitment to profitable growth,” said Isabelle Marcoux, Chair of the Board, Transcontinental. “We are convinced that this transformational acquisition will be a driver in the creation of long-term value for all of our stakeholders. It is with pride that we begin the next chapter of our successful journey with Coveris Americas, its employees and customers, building on our values of respect, teamwork, performance and innovation.”

Based on Coveris Americas’ financial results for its fiscal year ended December 31, 2017, and on TC Transcontinental’s financial results for its fiscal year ended October 29, 2017, the pro forma consolidated revenues and Adjusted EBITDA for the combined entity for fiscal 2017 are estimated at C$3.3 billion and C$564 million, respectively, with flexible packaging accounting for approximately 48 percent of total revenues.

“We are thrilled to announce such a game-changing transaction for TC Transcontinental and to bring our vision of becoming a North American leader in flexible packaging to life,” said François Olivier, President and CEO of TC Transcontinental. “The acquisition of Coveris Americas adds significant depth and scale to our existing platform, with flexible packaging operations now expected to be our largest division in terms of TC Transcontinental’s pro forma revenues based on its fiscal year 2017.

“This transaction complements and bolsters our existing product offering in several flexible packaging end markets including dairy, pet food and consumer products,” continued Olivier. “Additionally, it allows us to enter new and attractive flexible packaging end markets such as agriculture, beverage and protein.”