The deal, worth $165m (£99m), should strengthen Graphic Packaging’s position in the European printed folding carton market and broaden its offerings in food and consumer products and extending the business into the store brand market.
The acquisition is expected to create a $700m (£420m) business in Europe.
The Georgia-based company is one of the largest producers of folding cartons and holds a strong market position in coated-unbleached kraft, coated-recycled boxboard multi-wall bag and specialty packaging, and is expected to generate $5-$7m (£3-£4.2m) of synergies over the next 18 months.
David Scheible, Graphic Packaging’s chairman, president and chief executive, said the acquisition broadens its food and consumer products offerings.
“The combination of Benson Group and our existing European businesses is expected to greatly enhance our folding carton business in Europe, with sales in excess of $700m. This combination also allows us to broaden our customer base and to offer our current global customers a wider range of new products and services. Like our strategy in the United States, we are committed to growing our European business around food and beverage end markets and optimizing our supply chain footprint around our customers’ needs.”
Mark Kerridge, managing director of Benson Group, told Packaging News the deal was a good opportunity for Benson Group to become part of Graphic Packaging’s ambitious growth plans for Europe, and there was no restructuring planned.
“On the contrary, this is an excellent time to strengthen the team. Businesses can invest in the best equipment and buy the best materials, but it is people that deliver results. Being part of a large, global organisation provides stronger development and growth opportunities for employees at all levels.”
He said Graphic Packaging is committed to operating world class facilities and this may result in additional investments.
“The recently announced Heidelberg perfector press for Benson Gateshead will certainly be going ahead as planned.”
Nicholas Mockett, head of packaging M&A at Moorgate Capital, said: “Benson is a leading supplier of cartons to the supermarkets, often via packer fillers, for retailer own brand labels and has enjoyed strong growth as the supermarkets favour their own brands through their retail channels, as the private label products generally earn higher margins compared with retailing the famous name equivalent. Graphic Packaging, which has built its presence significantly in Europe in the last year, particularly with its acquisition of Contego should enjoy enhanced relationships with the retail community alongside its strong position with the large FMCG companies”.
The Benson Group operates four folding carton facilities in the UK that convert approximately 80,000 tons of paperboard annually.
It is one of the UK’s leading privately owned printed folding carton suppliers, employing over 900 employees, with annual sales in excess of £120m.
Its customer base features blue-chip businesses including Two Sisters Food Group, Reckitt Benckiser, Greencore and Samworth Brothers.