Sonoco announced Tuesday it will divest its protective solutions packaging business. It will sell the business to alternative asset management firm Black Diamond Capital Management for an estimated $80 million in cash.
The company said the sale, through certain of its subsidiaries, is due to its ongoing “portfolio optimization strategy.” While the transaction is subject to closing conditions, it is expected to be completed in the first half of this year.
The protective solutions business manufactures molded expanded polypropylene and expanded polystyrene foam components for markets including automotive, power sports, impact surfaces, HVAC, electronics and technology, appliances and various other industrial end markets. It has nine manufacturing facilities and about 900 employees, with net sales of about $170 million in 2023, the company said. (Financial results for this business have been reported in Sonoco’s ‘All Other Businesses’ reporting segment.)
“I personally would like to thank the entire Protective Solutions team for their years of delivering quality products and outstanding customer service on behalf of Sonoco. We know their knowledge, experience, and leadership will be greatly valued by their new owner and wish the entire team much continued success in the future,” Howard Coker, Sonoco president and CEO, said in a news release.
During Sonoco’s most recent earnings call in November, executives cited flat demand and volumes in the industrial sector and lower year-over-year volumes in the consumer sector, in part due to lingering destocking. Chief Operating Officer Rodger Fuller said that in Q4, “the team is focused on cost control. Footprint optimization in all forms of productivity will be critical until we see a sustained improvement in customer demand.” The company’s next earnings release, covering Q4 and full-year 2023 results, is expected Feb. 14.
The company’s other recent M&A activity included completing its acquisition of the remaining stake in RTS Packaging from WestRock, in addition to a WestRock paper mill in Chattanooga, Tennessee, for a purchase price of $330 million. The deal added 15 facilities and 1,100 employees to Sonoco’s operations.