According to M. Jack Sanders, Sonoco president and CEO, the acquisition of family-owned Weidenhammer Packaging Group will create a global leader in rigid paper packaging and is expected to increase Sonoco's global consumer-related packaging and services business to approximately $2.8 billion in annual sales or approximately 53% of the Company's combined revenue of approximately $5.3 billion. In addition, the combination is expected to increase Sonoco's net sales in Europe to approximately 21% of total sales.
Weidenhammer Packaging's projected 2014 sales are expected to be approximately Euro 244 million, or $327 million, with projected EBITDA expected to be approximately Euro 42 million, or $56 million.
The transaction is expected to have no material impact to Sonoco's 2014 base earnings and should be accretive to Sonoco's 2015 base earnings in the range of $.09 to $.14 per share, including estimated adjustment for purchase accounting and first year synergies. Future accretion is expected through material internalization and other cost synergies.
Commenting on the acquisition, Sanders said, "Combining Weidenhammer's state-of-the-art production and technological capability places Sonoco in a leading position to provide its global consumer product customers with unparalleled packaging expertise throughout North America and Europe, and creates a strong presence in the emerging markets of Southeast Asia, China, Eastern Europe and South America."
Sonoco intends to fund the acquisition through a combination of existing cash and debt with an estimated combined net credit leverage ratio of 1.75 times at closing.
In 2015, the Company intends to use free cash flow for debt repayment. (Free cash flow is defined as cash flow from operations minus net capital expenditures and cash dividends). The acquisition is subject to governmental regulatory review and is expected to close in the 4Q 2014.