SIG Combibloc acquires cardboard bag maker Scholle IPN for $1.53 billion

The logo of SIG Combibloc Group, manufacturer of carton packaging and filling machines for beverages and food, is seen at a factory in the town of Neuhausen, Switzerland, June 15, 2016. REUTERS/Arnd Wiegmann

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  • Deal to be financed in shares, cash
  • Equity value of €1.05 billion
  • Laurens Last will become the main shareholder
  • Decline in profitability, then recovery

ZURICH, Feb 1 (Reuters) – Swiss packaging firm SIG Combibloc (SIGNC.S) is acquiring privately held U.S. company Scholle IPN for an enterprise value of 1.36 billion euros ($1.53 billion ) to strengthen its position in sustainable packaging, it said on Tuesday.

A leader in aseptic food packaging, SIG said the deal would help it grow its presence in the United States, where Scholle generates 55% of its sales, and bring Scholle’s sustainable bag-in-box – largely used for transporting liquids – in Asia and Latin America.

Group sales are expected to continue to grow by 4-6% pa in the medium term, while profitability – under pressure from rising input costs – is expected to fall temporarily before recovering to over 27 %, chief executive Samuel Sigrist told Reuters.

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“This is a strategic acquisition, but we are now focused on organic growth on this new platform,” he said.

Sigrist said price increases, efficiencies and cost synergies would help improve margins and offset input costs.

The enterprise value, equivalent to a multiple of 14.5 times adjusted earnings before interest, tax, depreciation and amortization (EBITDA), will be funded by 33.75 million SIG shares of existing authorized capital and 370 million euros in cash and debt refinancing, the company said. .

It will also issue equity of around 200 to 250 million euros.

Current Scholle owner Laurens Last will become SIG’s largest shareholder with a 9.1% stake, subject to a lock-up period. He will also join the SIG Board of Directors.

The acquisition, which is expected to close before the end of the third quarter, should contribute to cash flow and earnings per share in the first year following its closing. Sigrist said he didn’t expect any regulatory hurdles.

Sigrist said the company would propose to increase its dividend to 0.45 Swiss francs ($0.4874) per share for 2021 from 0.42 francs in 2020.

The shares were up 0.75% at 0822 GMT.

UBS Investment Bank acted as financial advisor to SIG, and Latham & Watkins and Advestra as legal advisors.

($1 = 0.8895 euros)

($1 = 0.9232 Swiss francs)

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Editing by Miranda Murray and Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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