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Bloomberg Markets: Industrial and consumer packaging giant Sonoco announced this week that it will acquire can manufacturer Eviosys for nearly $4 billion.
4 Months ago
will the industrial and consumer packaging giant sonoco announced this week that it will buy can maker Eviosys for nearly four billion dollars and joining us now on the news i'm please to say we have howard coker is sonoco president and ceo and let's talk about the logic of this deal what is the acquisition of a european can maker add to your portfolio over at sunoco let me start sonoco is not a household name but we we exist in just about every household in america so we're twenty five year old company based here in hartsville south carolina seven billion dollars of turnover and we are have some very big brands from a legacy perspective one of which is our paper can business so pringles is the ambassador to that the planners could keep going on and on so we did an acquisition about three years ago that fit hand in glove with our position on the paper can side we are the largest producer globally of paper cans we've been on an acquisition in the food and art space here in north america and it has gone extremely well we have the integration to energies and most importantly the market reaction has been fantastic in terms of the customers so with that background the opportunity came to us to acquire dEviosys it was a perfect fit and every every way we look at things from from from culture from a technology perspective from an innovation perspective and then you layer on that the the financial opportunities we're just so compelling and yes it will leave us as the world's largest producer of metal food aluminum and steel containers as well as a very large position in the market interesting so taking that position as the biggest maker of paper cans now of course strengthening your position when it comes to metal cans as well i do want to talk a little bit about the price tag because you've had some mixed reaction from wall street there was a note out from city yesterday noting that sonoco seems to be seems to be paying rather about seventy percent more for votes than like kps who you're buying it from paid for the company in twenty twenty one so why that premium premium is that cps did a fantastic job and improving the improving the performance of the company so the the the cash flow the capital invested in the business are reflective of the current valuation so a little bit of chalk and cheese there if you look at evaluation of three years ago to where it is today it is an extremely fair valuation and frankly if you look at the synergy opportunity alone you know we're in the seven time multiple type range and those energies available to us almost on day one so the bulk in the first year and then the rest in the second year of ownership and not what's not captured is the the commercial opportunities hard to put a value on that but with with the reception that we received in north america that there is a strategic extremely interested leaning into this business that has a reputation one hundred and twenty five year reputation part partnerships and taking care of customers those we think again not qualified in our financial analysis the real upside to this as we go forward right and i hear what you're saying about some of those unquantifiable metrics folding into the valuation but even still you take a look at moody's they placed your credit rating on negative watch so what are your plans to avoid an eventual downgrade there we've got first off right mood so we're still investment great that's important to us and we have a clear path to to deleveraging over the course of the next two years starting with the fact that we we have several pretty high value assets in our portfolio that we were very clear an announcement that we intend to sell some businesses that that are great businesses but just just are not a good fit for us strategically that are in better hands with other owners and i just want to be brought down and talk about the industry in general of course you're coming forward with this acquisition and you take a look at some of your peers and there's really been a flurry of deal making you take a look at international paper for example buying smith and of course international paper itself drawing over takeover interest i mean what do you chalk that up to what is going on in the pakistan industry right now you know focus on what goes on within our four walls and what what is important for our than what's important to our investors and we look at this market it's it's a twenty five billion dollar market globally we'll have the the largest position that in of itself is going to carry tremendous opportunities in terms of how we're able to take advantage of this large market and create growth yes not going on the space but we're focused on sonoco our team members numbers and seeing this the successful acquisition which it will be all right howard hope to check in with you soon about this acquisition as it gets integrated really appreciate your time today though we think howard coker of sunoco time now for social.
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