Sonoco Wraps Up Corenso Holdings America Acquisition
August 18, 2019SON recently completed the acquisition of
Corenso Holdings America, Inc. (CHA) for a cash consideration of $110 million.
This May, Sonoco had signed an agreement to acquire Corenso Holdings America,
Inc. Corenso is a manufacturer of uncoated recycled paperboard (URB) and
high-performance cores used in the packaging films, tape, paper and specialty
industries. The company produced net sales of around $75 million in 2018.
Corenso operates a 108,000-ton per year URB mill in Wisconsin Rapids, WI, and
two core converting facilities in Wisconsin Rapids and Richmond, VA.
Notably, the deal creates a long-term opportunity for Sonoco by expanding its
paperboard and core converting operations. Corenso’s best-in-class URB mill
produces a wide range of coreboard grades. Additionally, it provides core
converting assets and long-term partnerships with customers.
The buyout will be modestly accretive to Sonoco’s earnings in the current year.
The deal was funded by cash and short-term borrowings. Further, Corenso’s
financial results will be reported within Sonoco’s Paper and Industrial
Converted Products segment.
Sonoco recently reported second-quarter
2019 results. Adjusted earnings were up 2.2% year over year to 95 cents per
share in the quarter. The company’s net sales came in at $1.36 billion,
marginally down from the prior-year quarter’s $1.37 billion. The downside
primarily resulted from lower volume and stronger U.S. dollar, partly offset by
increased sales from acquisitions.
Sonoco maintained its adjusted earnings per share guidance of $3.52-$3.62 for
the current year. For the ongoing quarter, the company projects adjusted
earnings per share of 88-94 cents compared with the year-ago quarter’s 86
cents.
Further, net sales in the Paper and Industrial Converted Products segment came
in at $491.3 million in the June-end quarter, representing an increase of 3.6%
year over year on the Conitex acquisition.
The company is focused on targeted acquisitions and development of
products. Last October, Sonoco acquired the remaining 70% interest in the
Conitex-Sonoco joint venture and Texpack’s composite can operation in Spain.
The acquisition of Conitex Sonoco will assist the company in expanding its
manufacturing presence in the Americas, Europe, and the rapidly-growing
emerging markets in Asia. It will also help build strong customer relationships
by offering innovative packaging solutions in paperboard, textile carriers and
other value-added products. The company also completed the buyout of Highland
Packaging Solutions last April and bought Clear Lam in July 2017. These
transactions are likely to be accretive to the company’s earnings growth in the
ongoing year.
Sonoco has outperformed the industry it belongs to over the past year. The
stock has appreciated around 5.3% as against the industry’s loss of 31.5%.