Sonoco Announces Review of Strategic Alternatives for the Thermoformed & Flexibles Packaging Business as Part of Further Portfolio Simplification
Sonoco Products Company (NYSE: SON) has announced a strategic review of its Thermoformed & Flexible Packaging (TFP) business, part of its Consumer Packaging segment. This move aims to accelerate portfolio simplification, improve pro forma leverage, and increase shareholder value. The TFP business, a market leader in thermoformed and flexible packaging, generated $1.3 billion in revenue in 2023.
As a result of this expanded divestiture plan, Sonoco has modified its financing strategy for the pending Eviosys acquisition. The company now plans to use a combination of prepayable debt, longer-term bond financing, and/or cash on hand, eliminating the need for equity issuance. Sonoco expects to complete the strategic review of TFP in the fourth quarter of 2024.
Sonoco Products Company (NYSE: SON) ha annunciato una revisione strategica della sua attività di Packaging Termoformati e Flessibili (TFP), parte del suo segmento di Packaging per Consumatori. Questa mossa mira a accelerare la semplificazione del portafoglio, migliorare la leva pro forma e aumentare il valore per gli azionisti. L'attività TFP, leader di mercato nel packaging termoformato e flessibile, ha generato 1,3 miliardi di dollari di entrate nel 2023.
A seguito di questo piano di disinvestimento ampliato, Sonoco ha modificato la propria strategia di finanziamento per l'acquisizione di Eviosys in sospeso. L'azienda prevede ora di utilizzare una combinazione di debito rimborsabile, finanziamenti obbligazionari a lungo termine e/o liquidità disponibile, eliminando la necessità di emissione di azioni. Sonoco prevede di completare la revisione strategica del TFP nel quarto trimestre del 2024.
Sonoco Products Company (NYSE: SON) ha anunciado una revisión estratégica de su negocio de Empaque Termoformado y Flexible (TFP), parte de su segmento de Empaque para Consumidores. Este movimiento tiene como objetivo acelerar la simplificación del portafolio, mejorar la apalancamiento pro forma y aumentar el valor para los accionistas. El negocio TFP, líder del mercado en empaque termoformado y flexible, generó 1.3 mil millones de dólares en ingresos en 2023.
Como resultado de este plan de desinversión ampliado, Sonoco ha modificado su estrategia de financiamiento para la adquisición pendiente de Eviosys. La empresa ahora planea utilizar una combinación de deuda prepagable, financiamiento de bonos a largo plazo y/o efectivo disponible, eliminando la necesidad de emisión de acciones. Sonoco espera completar la revisión estratégica del TFP en el cuarto trimestre de 2024.
Sonoco Products Company (NYSE: SON)는 소비자 포장의 일부인 열형성 및 유연한 포장(TFP) 사업에 대한 전략적 검토를 발표했습니다. 이 조치는 포트폴리오 단순화를 가속화하고 프로 포마 레버리지를 개선하며 주주 가치를 증대시키기 위한 것입니다. TFP 사업은 열형성 및 유연한 포장 분야의 시장 리더로서 2023년에 13억 달러의 수익을 올렸습니다.
이 확장된 매각 계획의 결과로 Sonoco는 예정된 Eviosys 인수에 대한 재무 전략을 수정했습니다. 회사는 이제 상환 가능한 채무, 장기 채권 금융 및/또는 현금을 조합하여 사용하고 주식 발행의 필요성을 없앨 계획입니다. Sonoco는 2024년 4분기까지 TFP에 대한 전략적 검토를 완료할 것으로 예상합니다.
La Sonoco Products Company (NYSE: SON) a annoncé un examen stratégique de son activité d'Emballage Thermoformé et Flexible (TFP), qui fait partie de son segment d'Emballages pour Consommateurs. Ce mouvement vise à accélérer la simplification du portefeuille, améliorer le levier pro forma et augmenter la valeur pour les actionnaires. L'activité TFP, leader du marché dans l'emballage thermoformé et flexible, a généré 1,3 milliard de dollars de chiffre d'affaires en 2023.
En raison de ce plan de désinvestissement élargi, Sonoco a modifié sa stratégie de financement pour l'acquisition d'Eviosys en cours. L'entreprise prévoit désormais d'utiliser une combinaison de dette remboursable, de financement obligataire à long terme et/ou de liquidités disponibles, supprimant ainsi le besoin d'émettre des actions. Sonoco s'attend à compléter l'examen stratégique de TFP au quatrième trimestre de 2024.
Die Sonoco Products Company (NYSE: SON) hat eine strategische Überprüfung ihres Geschäftsbereichs Thermoform- und Flexible Verpackungen (TFP) angekündigt, der Teil ihres Segments Verbraucherverpackungen ist. Dieser Schritt zielt darauf ab, die Portfoliostruktur zu vereinfachen, das pro forma-Verbesserung zu steigern und den Wert für die Aktionäre zu erhöhen. Das TFP-Geschäft, das Marktführer im Bereich der thermoformbaren und flexiblen Verpackungen ist, erzielte im Jahr 2023 1,3 Milliarden Dollar Umsatz.
Im Zuge dieses erweiterten Desinvestitionsplans hat Sonoco seine Finanzierungsstrategie für die bevorstehende Übernahme von Eviosys geändert. Das Unternehmen plant nun, eine Kombination aus rückzahlbarer Verschuldung, langfristigen Anleihefinanzierungen und/oder vorhandenen Barmitteln zu nutzen, um die Notwendigkeit der Aktienemission zu beseitigen. Sonoco erwartet, die strategische Überprüfung des TFP im vierten Quartal 2024 abzuschließen.
- Potential acceleration of portfolio simplification strategy
- Expected improvement in pro forma leverage
- Anticipated increase in shareholder value
- TFP business generated $1.3 billion in revenue in 2023
- Modified financing plan eliminates need for equity issuance for Eviosys acquisition
- Expected further reduction in net leverage within 24 months of Eviosys acquisition
- Potential divestiture of a significant revenue-generating business unit
Insights
The announcement of Sonoco's strategic review for its Thermoformed & Flexible Packaging (TFP) business is a significant development for investors. With
The decision to modify financing plans for the Eviosys acquisition, eliminating the need for equity issuance, is particularly noteworthy. This change suggests confidence in the company's ability to generate cash and reduce leverage through divestitures and operations. Investors should closely monitor the outcome of this strategic review, as it could lead to a more focused and potentially more profitable Sonoco in the long term.
Sonoco's strategic review of its TFP business reflects a broader industry trend towards portfolio optimization and focus on core competencies. The TFP segment, serving diverse markets including food, retail and medical, holds a strong market position. However, its potential divestiture signals Sonoco's commitment to streamlining operations and potentially reallocating resources to higher-margin or faster-growing segments.
This move could reshape Sonoco's competitive landscape, potentially creating opportunities for rivals or private equity firms interested in acquiring a market-leading packaging business. Investors should consider the long-term implications on Sonoco's market positioning and growth prospects in its remaining core businesses.
Sonoco's decision to explore strategic alternatives for its TFP business is a bold move in its portfolio simplification journey. This strategy of focusing on "fewer bigger businesses" could lead to improved operational efficiency and potentially higher returns on invested capital. The company's emphasis on industrial paper products, rigid paper containers and metal packaging suggests a shift towards areas where Sonoco believes it has a stronger competitive advantage.
The modified financing plan for the Eviosys acquisition, avoiding equity issuance, demonstrates financial prudence and confidence in the company's cash generation capabilities. This approach could preserve shareholder value while still allowing for strategic growth. The expected completion of the review by Q4 2024 provides a clear timeline for investors to anticipate potential changes in Sonoco's business structure.
HARTSVILLE, S.C., Sept. 04, 2024 (GLOBE NEWSWIRE) -- Sonoco Products Company (“Sonoco” or the “Company”) (NYSE: SON), a global leader in high-value sustainable packaging, today announced that it has initiated a review of strategic alternatives for the Company’s Thermoformed & Flexible Packaging (“TFP”) business, a part of the Company’s Consumer Packaging segment. Exploring alternatives for the TFP business is expected to accelerate Sonoco’s portfolio simplification strategy, improve pro forma leverage and further increase shareholder value.
Sonoco’s TFP is a market leading thermoformed and flexible packaging business serving a wide range of customers in food, retail and medical markets. TFP provides a variety of complex packaging to value-added categories including snacks, condiments, healthcare, prepared meals, fresh products and coffee and pet. On a pro forma standalone basis, TFP had revenue of
“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,” said Howard Coker, President, and Chief Executive Officer of Sonoco. “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.”
As a result of the expanded divestiture plans, Sonoco has modified its financing plans for its pending acquisition of Eviosys. The Company now intends to finance the Eviosys acquisition through a combination of prepayable debt, longer-term bond financing and/or cash on hand. With increased debt reduction from divestitures and cash from operations, Sonoco expects to further reduce net leverage from previous estimates within 24 months of the Eviosys acquisition. As a result, Sonoco no longer anticipates issuing equity to fund the Eviosys acquisition.
The strategic review process of TFP is underway and Sonoco expects to complete it in the fourth quarter of 2024.
About Sonoco:
With net sales of approximately
Forward-Looking Statements
Certain statements made in this communication are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “assume”, “believe”, “committed”, “continue”, “could”, “estimate”, “expect”, “focused”, “future”, “guidance”, “likely”, “may”, “ongoing”, “outlook”, “potential”, “seek”, “strategy”, “will”, or the negative thereof, and similar expressions identify forward-looking statements.
Forward-looking statements in this communication include, but are not limited to, the Company’s review of strategic alternatives for its TFP business and the anticipated effects thereof, including with respect to the Company’s strategy, pro forma leverage, results and shareholder value; anticipated investment in the Company’s remaining businesses; the timing of such strategic review; the Company’s pending acquisition of Eviosys and the anticipated effects and timing thereof; the Company’s financing plans with respect to the Eviosys acquisition; the Company’s expected use of proceeds of its planned divestitures, including the timing thereof; and the Company’s targeted net leverage.
These forward-looking statements are made based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning the Company’s future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. Risks and uncertainties include, among other things, risks related to the Company’s planned divestitures, including that such divestitures will not be completed on the timing or terms the Company anticipates, or at all; risks related to the Eviosys acquisition, including that the Eviosys acquisition will not be consummated; conditions in the credit markets and the ability to obtain financing for the Eviosys acquisition on the timing or terms the Company anticipates; the ability to receive regulatory approvals for the Eviosys acquisition in a timely manner, on acceptable terms or at all, or to satisfy the other closing conditions to the Eviosys acquisition; the ability to retain key employees and successfully integrate Eviosys; the Company’s ability to realize estimated cost savings, synergies or other anticipated benefits of the Eviosys acquisition, or that such benefits may take longer to realize than expected; diversion of management’s attention; the potential impact of the announcement or consummation of the Eviosys acquisition on relationships with clients and other third parties; the Company’s ability to execute on its strategy, including with respect to portfolio simplification, cost management, productivity improvements, restructuring and capital expenditures, and achieve the benefits it expects therefrom; the operation of new manufacturing capabilities; the availability, transportation and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflict between Russia and Ukraine as well as the economic sanctions related thereto, and the ongoing conflict in Israel and Gaza), and the Company’s ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks; the costs of labor; the effects of inflation, fluctuations in consumer demand, volume softness, and other macroeconomic factors on the Company and the industries in which it operates and that it serves; the Company’s ability to meet its environmental and sustainability goals, including with respect to greenhouse gas emissions; and to meet other social and governance goals, including challenges in implementation thereof; and the other risks, uncertainties and assumptions discussed in the Company’s filings with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors”. Except as required by applicable law, the Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed herein might not occur.
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Contact Information
Investors
Lisa Weeks
Vice President of Investor Relations & Communications
lisa.weeks@sonoco.com
843-383-7524
Media
FGS Global
Leah Polito / Jamie Baird
Sonoco@fgsglobal.com
FAQ
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