Smurfit-Stone Container Corporation, one of the world’s largest integrated manufacturers of paperboard and paper-based packaging, is to sell its consumer packaging operations in the US and Canada to a company formed by Texas Pacific Group (TPG), for approximately US$1.04bn in cash.
The businesses to be sold employ some 6,600 and include four coated recycled boxboard mills, 39 consumer packaging converting plants in the US, including operations producing folding cartons, multiwall and speciality bags, flexible packaging and labels, American contract packaging and lamination businesses and one consumer packaging plant in Brampton, Ontario.
Smurfit-Stone simultaneously announced that John Riconosciuto had resigned as the company’s coo to become ceo of the newly formed consumer packaging business for Texas Pacific Group.
Purchaser TPG manages one of the world’s largest private investment companies and has a long history of successfully acquiring divisions of large corporations, including Beringer (Nestlé), Burger King (Diageo), ON Semiconductor (Motorola), Paradyne and GlobeSpan (Lucent) and Texas Genco (CenterPoint Energy). Portfolio companies controlled by the firm have combined revenues of more than US$65bn and operate in over 120 countries.
Patrick J Moore, Smurfit-Stone chairman and ceo, says of the deal: “Today’s announcement represents an important milestone in the execution of our strategic plan, which includes improving the company’s financial flexibility through debt reduction. The transaction meets our expectation of value and we will be able to use essentially all of the proceeds to reduce our debt. It was very important to obtain a deal with fully committed financing that could be closed quickly and minimise disruption to our customers and employees.”
Following the sale, Smurfit-Stone’s remaining packaging assets include 18 North American containerboard mills, 150 corrugated container conversion plants in the US, Canada and Mexico and 20 US recycling facilities.
Tom Lange, a Smurfit-Stone media spokesman, adds: “The disposals are in line with a strategy clearly outlined publicly over the last six months. Among the goals are to make many of our plants’ operations more specialist and thus avoid duplication with the activities of other production facilities, further expand our partnerships with customers and add value to existing brands, create a new organisational sales structure, and create the financial flexibility to achieve our medium to longer term goals.”
