Sonoco Products Company 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 $1.3 billion in 2023.
"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.
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