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Sonoco to buy Weidenhammer Packaging Group

Staff writer |
Sonoco has signed a definitive agreement to acquire Weidenhammer Packaging Group, Europe's provider of composite cans along with composite drums and rigid plastic containers.

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The price is €286 million, or approximately $383 million, in cash. The final consideration is subject to a normal adjustment of net working capital.

Weidenhammer Packaging, headquartered in Hockenheim, Germany, has approximately 1,100 employees and operates 13 production facilities, including five in Germany, along with individual plants in Belgium, France, Greece, The Netherlands, United Kingdom, United States, Chile and Russia.

In addition to producing composite cans, drums and luxury tubes, Weidenhammer produces unique rigid plastic containers using state-of-the-art thin-walled injection molding technology with modern in-mold labeling. Markets served by the company include processed foods, powdered beverages, tobacco, confectionery, personal care, pet food, pharmaceuticals and home and garden products.

Weidenhammer Packaging's projected 2014 sales are expected to be approximately €244 million, or $327 million, with projected EBITDA expected to be approximately €42 million, or $56 million.

The transaction is expected to have no material impact to Sonoco's 2014 base earnings and should be accretive to Sonoco's 2015 base earnings in the range of $.09 to $.14 per share, including estimated adjustment for purchase accounting and first year synergies. Future accretion is expected through material internalization and other cost synergies.

Sonoco intends to fund the acquisition through a combination of existing cash and debt with an estimated combined net credit leverage ratio of 1.75 times at closing. In 2015, the Company intends to use free cash flow for debt repayment. (Free cash flow is defined as cash flow from operations minus net capital expenditures and cash dividends). The acquisition is subject to governmental regulatory review and is expected to close in the fourth quarter of 2014.

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