TOPPAN Holdings Acquires Sonoco's TFP Business

Rhea-AI Summary

TOPPAN Holdings (TYO: 7911) has agreed to acquire Sonoco's Thermoformed & Flexible Packaging (TFP) business for approximately $1.8 billion on a cash-free and debt-free basis. The acquisition combines Sonoco TFP's robust sales network and customer base in the Americas with TOPPAN Group's technical expertise in global packaging.

Sonoco's TFP, which generated approximately $1.3 billion in revenue in 2023, is a leading provider of thermoformed and flexible packaging serving food, retail, and medical verticals. The transaction is expected to close in the first half of 2025, subject to regulatory approvals.

This acquisition aligns with TOPPAN Group's strategy to become a global leader in sustainable packaging solutions and represents a significant milestone in their global expansion plans.

Positive

• Strategic acquisition valued at $1.8 billion expands TOPPAN's presence in Americas
• Addition of TFP business with $1.3 billion in annual revenue (2023)
• Complementary business combination enhancing market reach and technical capabilities
• Access to established customer base in food, retail, and medical verticals

Negative

• Significant capital expenditure of $1.8 billion required for acquisition
• Regulatory approval risks could delay closing beyond H1 2025

Insights

M&A Specialist

This $1.8 billion acquisition represents a strategic masterpiece in the packaging industry. The deal values Sonoco's TFP at approximately 1.38x revenue ($1.3 billion 2023 revenue), which appears reasonable given the business's strategic positioning in high-value sustainable packaging. The transaction demonstrates TOPPAN's ambitious expansion strategy in the Americas, providing immediate scale and market access.

The deal's structure - cash-free and debt-free basis - indicates a clean transaction that will likely result in efficient integration. The geographic complementarity is particularly compelling - TOPPAN gains instant access to established North and South American distribution networks and customer relationships, while bringing their technical expertise to these markets.

The focus on value-added categories (snacks, healthcare, prepared meals) positions the combined entity well in high-margin segments with strong growth potential. This move significantly accelerates TOPPAN's global sustainable packaging ambitions, potentially creating a formidable competitor in the space.

Sustainability Expert

This acquisition marks a pivotal shift in the sustainable packaging landscape. TOPPAN's explicit focus on sustainable solutions through this acquisition aligns perfectly with increasing global regulatory pressure and consumer demand for environmentally responsible packaging. The combination of TOPPAN's technical capabilities with Sonoco's TFP's established presence in key markets creates a powerful platform for sustainable innovation.

The target segments - food, retail and medical verticals - are precisely where sustainable packaging innovation is most critical and valuable. These sectors face intense pressure to reduce plastic waste and carbon footprint while maintaining product protection and safety. The merged entity's ability to leverage combined R&D capabilities could accelerate the development of next-generation sustainable packaging solutions.

Market Research Analyst

This transaction will likely reshape competitive dynamics in the Americas packaging market. With TFP's $1.3 billion revenue integration, TOPPAN gains significant market share in important growth segments. The timing is strategic, as the sustainable packaging market is experiencing rapid growth driven by regulatory changes and consumer preferences.

The deal's expected closure in H1 2025 provides adequate time for regulatory approvals while maintaining momentum. The retention of TFP's customer base and sales network will be important for realizing the full value of this acquisition. The focus on value-added categories suggests potential for margin expansion through technical innovation and operational synergies.

Agreement reached on acquisition of Sonoco's TFP business as TOPPAN Group accelerates expansion of sustainable packaging business in Americas

TOKYO, Dec. 18, 2024 /PRNewswire/ -- TOPPAN Holdings Inc. (TYO: 7911) (TOPPAN Holdings) has entered into an agreement with Sonoco Products Company (NYSE: SON) (Sonoco), a global leader in high-value sustainable packaging, to acquire Sonoco's Thermoformed & Flexible Packaging (TFP) business for approximately $1.8 billion on a cash-free and debt-free basis and subject to customary adjustments.

This acquisition is highly complementary, combining the robust sales network, customer base, and solution development capabilities of Sonoco's TFP business in North and South America with the technical expertise and manufacturing capabilities of TOPPAN Group's global packaging business.

Sonoco's TFP is a leading thermoformed and flexible packaging business serving a wide range of customers in food, retail, and medical verticals. TFP provides a variety of complex packaging to value-added categories including snacks, condiments, healthcare, prepared meals, fresh products, coffee, and pet food. On a pro forma standalone basis, TFP had revenue of approximately $1.3 billion in 2023.

"We are extremely pleased to have the opportunity to bring Sonoco's TFP business to the TOPPAN Group. In order to accelerate our strategy to become a global leader in sustainable packaging solutions, we will employ the complementary strengths of both parties to drive growth, solve customers' needs and create significant value for our shareholders," said Hideharu Maro, Representative Director, President & CEO of TOPPAN Holdings. "This is an essential milestone in the TOPPAN Group's global strategy to scale the sustainable packaging business."

This transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the first half of 2025.

The TOPPAN Group's Strategy

The TOPPAN Group aims to be a leading solution provider addressing global issues. Under the current medium-term-strategy, the TOPPAN Group has been transforming its portfolio, and one of its key strategies is to drive sustainable packaging solutions at global scale.

The vision of the TOPPAN Group's packaging business is "Change the World through Packaging Innovation," and its mission is to "Foster a society focused on well-being and sustainability, while safeguarding our planet for future generations, through the continuous development of innovative packaging solutions that explore cutting-edge materials and technologies."

The TOPPAN Group has been driving innovation in the development of sustainable packaging solutions by establishing a global supply chain from film manufacturing to packaging manufacturing and optimizing cost to meet brand owners' needs locally and globally.

Advisors
Houlihan Lokey is acting as lead financial advisor and Morrison & Foerster LLP is acting as legal advisor to TOPPAN. Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is also acting as financial advisor to TOPPAN.

Goldman Sachs & Co. LLC is acting as lead financial advisor and Freshfields LLP is acting as legal advisor to Sonoco. RBC Capital Markets, LLC is also acting as financial advisor to Sonoco.

About the TOPPAN Group

Established in Tokyo in 1900, the TOPPAN Group is a leading and diversified global provider committed to delivering sustainable, integrated solutions in fields including printing, communications, security, packaging, décor materials, electronics, and digital transformation. The TOPPAN Group's global team of more than 50,000 employees offers optimal solutions enabled by industry-leading expertise and technologies to address the diverse challenges of every business sector and society and contribute to the achievement of shared sustainability goals.

https://www.holdings.toppan.com/en/
https://www.linkedin.com/company/toppan/

About Sonoco's TFP

Sonoco's TFP business has a strong customer base and manufacturing footprint in North America and South America with approximately 4,500 employees in 22 manufacturing plants, over 700 patents, and design capability across 10 countries.

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SOURCE TOPPAN Holdings Inc.

FAQ

What is the value of TOPPAN Holdings' acquisition of Sonoco's TFP business?

TOPPAN Holdings is acquiring Sonoco's TFP business for approximately $1.8 billion on a cash-free and debt-free basis, subject to customary adjustments.

How much revenue did Sonoco's TFP business generate in 2023?

On a pro forma standalone basis, Sonoco's TFP business generated approximately $1.3 billion in revenue in 2023.

When is the TOPPAN-Sonoco TFP acquisition expected to close?

The acquisition is expected to close in the first half of 2025, subject to customary closing conditions and regulatory approvals.

What markets does Sonoco's TFP business serve?

Sonoco's TFP business serves a wide range of customers in food, retail, and medical verticals, providing packaging solutions for snacks, condiments, healthcare, prepared meals, fresh products, coffee, and pet food.

How does this acquisition align with TOPPAN's business strategy?

The acquisition aligns with TOPPAN Group's strategy to become a global leader in sustainable packaging solutions and accelerate their expansion in the Americas market.