Transcontinental Inc. has announced that it has entered into a definitive agreement to acquire the business of Coveris Americas, a business held by Coveris Holdings S.A., a portfolio company of Sun Capital Partners, Inc. The purchase price is US$1.32 billion, subject to customary closing adjustments.

Coveris Americas is one of the top ten converters of flexible packaging and other value-added products in North America based on revenues for its fiscal year ended December 31, 2017. Headquartered in Chicago, Illinois, Coveris Americas manufactures a variety of flexible plastic and paper products, including rollstock, bags and pouches, coextruded films, shrink films, coated substrates and labels.

As of December 31, 2017, Coveris Americas operated 21 production facilities worldwide, namely in the Americas, the United Kingdom and Australasia. Coveris Americas has over 3,100 employees, the majority of whom are located in the Americas. For its fiscal year ended December 31, 2017, Coveris Americas generated US$966 million in revenues and $128 million in Adjusted EBITDA.

“Today’s announcement marks a turning point in TC Transcontinental’s 42-year history. This transaction crystallizes our strategic shift toward flexible packaging and solidifies our commitment to profitable growth,” said Isabelle Marcoux, Chair of the Board of Transcontinental Inc. “We are convinced that this transformational acquisition will be a driver in the creation of long-term value for all of our stakeholders. It is with pride that we begin the next chapter of our successful journey with Coveris Americas, its employees and customers, building on our values of respect, teamwork, performance and innovation.”

“We are thrilled to announce such a game-changing transaction for TC Transcontinental and to bring our vision of becoming a North American leader in flexible packaging to life,” said François Olivier, President and Chief Executive Officer of TC Transcontinental. “The acquisition of Coveris Americas adds significant depth and scale to our existing platform, with flexible packaging operations now expected to be our largest division in terms of TC Transcontinental’s pro forma revenues based on its fiscal year 2017. This transaction complements and bolsters our existing product offering in several flexible packaging end markets including dairy, pet food and consumer products. Additionally, it allows us to enter new and attractive flexible packaging end markets such as agriculture, beverage and protein. We are looking forward to building on our combined strengths and to continue working with Coveris Americas’ loyal customers, many of whom are market leaders. We are also eager to welcome Coveris Americas’ talented employees who will bring their leading-edge expertise to TC Transcontinental.”

Craig Reese, Chief Executive Officer of Coveris Americas, said: “Today marks an exciting milestone for Coveris Americas as we join TC Transcontinental, a company that shares our passion for growth through innovation, service and quality.”

Marc Leder, Co-Chief Executive Officer of Sun Capital Partners, Inc., whose affiliate owns Coveris Holdings S.A., added: “We are extremely proud of our partnership with the management team to grow and improve Coveris Americas, and we are confident that TC Transcontinental is the right home for the business to continue its industry leadership.”

Complementing its solid printing and media operations, this Acquisition significantly diversifies TC Transcontinental’s business into flexible packaging. Based on Coveris Americas’ financial results for its fiscal year ended December 31, 2017 and on TC Transcontinental’s financial results for its fiscal year ended October 29, 2017, the pro forma consolidated revenues and Adjusted EBITDA for the combined entity for fiscal 2017 are estimated at C$3.3 billion and C$564 million, respectively, with flexible packaging accounting for approximately 48% of total revenues.

The terms of the Acquisition have been approved by the boards of directors of both TC Transcontinental and Coveris Americas. The Acquisition, which remains subject to certain customary closing conditions and receipt of applicable antitrust approvals, is expected to be completed in the third quarter of TC Transcontinental’s fiscal year 2018.