Transcontinental to buy plastics packager Coveris for $1.7 billion

Transcontinental Inc said on Monday it would buy the U.S. unit of plastics packager Coveris Holdings S.A for $1.70 billion as the Canadian printing company shifts its focus to a lucrative flexible packaging business.

As part of the deal, Transcontinental will take control of privately held Coveris Americas’s 21 production facilities that make rollstock, bags and pouches, shrink films and labels, among others.

The plastics and packaging industry has been consolidating fast to keep up with the rising demand from ecommerce and automotive sectors.

In February, LyondellBasell Industries NV bought smaller rival A. Schulman Inc for US$2.25 billion, doubling the size of its business that supplies plastic compounds to the packaging, electronics and building markets.

Transcontinental said it expects the acquisition to save costs of about US$20 million over the next two years and will use both cash in hand and debt for the deal.

Transcontinental is expected to close the deal in the third quarter of 2018.

BMO Capital Markets and J.P. Morgan Securities LLC acted as financial advisers to Transcontinental on the deal.

© Thomson Reuters 2018