According to Harris E. DeLoach, Jr., Sonoco chairman and CEO, the acquisition of Tegrant is the largest in Sonoco's history and will create a North American leader in multimaterial protective packaging. Tegrant is projected to generate 2011 sales of approximately $440 million. When combined, Sonoco is projected to generate sales of approximately $5.0 billion in 2012. The transaction is expected to be accretive to Sonoco's 2012 pro forma earnings by approximately $0.10 per diluted share, including estimated adjustments for purchase accounting and approximately $11 million of expected synergies, when fully realized.
The total purchase consideration, adjusted for expected tax benefits, is approximately 6.8 times Tegrant's estimated pro forma 2011 EBITDA of approximately $74 million, including synergies. The transaction is expected to be financed from existing cash and debt with an estimated credit leverage ratio of 2.2 times at closing. Sonoco intends to reduce the incremental debt using free cash flow over the next few years. The acquisition is subject to normal regulatory review and is expected to close in November 2011.
Tegrant operates three strategic business units. Protexic Brands, the largest business unit, is a manufacturer of molded expanded foam. The ThermoSafe Brands unit is a provider of temperature-assured solutions, primarily used in packaging temperature-sensitive pharmaceuticals and food. Tegrant's Alloyd Brands business unit is a manufacturer and designer of high-visibility packaging, printed products, and blister packaging machines for retail and medical markets.
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