Sonoco Initiates Strategic Review of Thermoformed & Flexible Packaging Business
Hartsville, S.C., September 4, 2024 – Sonoco Products Company (NYSE: SON), a global leader in sustainable, high-value packaging solutions, has announced the commencement of a strategic review for its Thermoformed & Flexible Packaging (TFP) business. This business unit forms part of Sonoco’s Consumer Packaging segment. The review is aimed at exploring strategic alternatives that could accelerate the ongoing portfolio simplification strategy, enhance pro forma leverage, and ultimately boost shareholder value.
Overview of Sonoco’s Thermoformed & Flexible Packaging Business
Sonoco’s TFP operates as a market-leading provider of thermoformed and flexible packaging products across diverse sectors including food, retail, and healthcare. The business specializes in complex packaging solutions tailored to value-added categories such as snacks, condiments, healthcare products, prepared meals, fresh produce, coffee, and pet food. On a standalone, pro forma basis, the TFP segment generated revenues of approximately $1.3 billion in 2023.
Strategic Focus and Corporate Vision
Howard Coker, President and CEO of Sonoco, emphasized the company’s continued commitment to focusing on a streamlined portfolio of larger, more impactful businesses. He stated, “Our strategy centers around investing in distinct operating models that differentiate our businesses. This strategic review of the TFP business represents a significant step forward in accelerating our portfolio simplification efforts and improving operating results.”
Coker further highlighted Sonoco’s enthusiasm for growth opportunities within its other core businesses, including industrial paper products, rigid paper containers, and metal packaging. These divisions have shown meaningful improvement since the launch of the current strategic plan, and Sonoco anticipates even stronger returns by dedicating focus and resources to these areas.
Adjustments to Financing Plans Amidst Business Review
In light of the expanded divestiture plans related to the TFP business, Sonoco has updated its financing approach for the pending acquisition of Eviosys. The company now plans to fund the Eviosys acquisition through a blend of prepayable debt, longer-term bond issuance, and available cash reserves. The anticipated proceeds from the ongoing divestitures, supplemented by operational cash flow, are expected to enable Sonoco to reduce its net leverage more quickly than previously forecast, within 24 months post-acquisition.
Importantly, this shift means Sonoco no longer expects to raise equity capital to finance the Eviosys purchase.
Timeline and Expectations
The review process for the TFP business has officially begun, with Sonoco targeting completion by the fourth quarter of 2024. The company has not yet announced specific outcomes but maintains its commitment to maximizing shareholder value through this strategic initiative.
About Sonoco
Sonoco reported net sales of approximately $6.8 billion in 2023. The company employs around 22,000 people and operates across more than 300 facilities worldwide, serving numerous globally recognized brands. Guided by its corporate mission, "Better Packaging. Better Life.," Sonoco strives to develop sustainable packaging solutions that benefit customers, employees, and communities alike.
Sonoco has earned recognition as one of America’s Most Responsible Companies by Newsweek, reflecting its dedication to corporate responsibility and sustainability.
Forward-Looking Statements and Risk Factors
Sonoco’s announcement includes forward-looking statements concerning the anticipated strategic review outcomes, the effects of divestitures, investment plans, financing mechanisms for acquisitions, and operational performance. These statements involve risks and uncertainties that could cause actual results to differ materially. Factors influencing these outcomes include timing and success of divestitures, regulatory approvals, integration of acquisitions, market conditions, raw material prices, geopolitical uncertainties, and adherence to sustainability goals.
Readers should refer to the company’s regulatory filings for a comprehensive discussion of risk factors. Sonoco undertakes no obligation to update forward-looking statements unless required by law.
Contact Information
Investors:
Lisa Weeks
Vice President, Investor Relations & Communications
Phone: 843-383-7524
Email: [email protected]
Media:
FGS Global
Leah Polito / Jamie Baird
Email: [email protected]
This strategic review reflects Sonoco’s dynamic approach to portfolio management and its focus on leveraging core strengths to deliver sustained value to customers and shareholders.