Zacks_Analysts' Blog : Sonoco Acquires Packaging Business - Analyst Blog

Sonoco Products Co. (SON) through its wholly owned subsidiary in the UK, recently concluded the acquisition of Robinson Paperboard Packaging Ltd., a division of Robinson PLC.  The world’s largest producer of paperboard cans, Sonoco acquired customer contracts along with other business assets of Robinson Paperboard Packaging Business.

Under the terms of the acquisition, Sonoco will operate from the existing Robinson’s Chesterfield paperboard can plant located on Goyt Side Road. The employees working currently at the facility will be retained. The Chesterfield plant has ISO 14001 environmental accreditation, and also possesses British Retail Consortium/IoP Food Hygiene and ISO 9001 accreditation.

The acquisition is likely to add approximately $10 million to annual sales. In addition to the above plant, Sonoco will carry on working with other segments of Robinson, including its plastic packaging division for the supply of plastic overcaps.

According to Sonoco, the acquisition of Robinson Paperboard Packaging business complements the company’s global packaging operations with its proven expertise in innovative paper bottom technology and unique, patented processes. The combination of the two enables Sonoco to further expand and develop in the United Kingdom and Europe.

Moreover, the acquisition broadens the market for rigid paper containers, which aim at reducing costs without compromising on quality and are also environment-friendly. Use of rigid paper packaging reduces package weight substantially, uses the raw material efficiently and conserves energy significantly.

Robinson’s existence dates back to 1839, when it started manufacturing rigid paperboard tubes and boxes for the food, drink, toiletries, cosmetics and the gift/presentation markets. Sonoco, on the other hand, operates since 1923 in the UK and currently employs 600 employees engaged in consumer and industrial packaging operations at 10 locations.  

Spread across 15 European countries, the company owns about 44 facilities, generating more than $700 million in annualized revenues. We currently have a Zacks #4 Rank (short-term Sell recommendation) on the stock.

Sonoco operates through four reportable segments: Tubes and Cores/Paper, Consumer Packaging, Packaging Services and All Other Sonoco segment. Sonoco competes with Bemis Company Inc. (BMS) and Rock-Tenn Co. (RKT).