UK carton converter Benson Group has been acquired by Graphic Packaging.
The addition of Benson Group further strengthens Graphic Packaging’s growing position in the European printed folding carton market. Benson Group’s three businesses in the UK will further strengthen Graphic Packaging’s footprint in Europe, while Benson Group’s position in the growing convenience/retail market particularly will complement Graphic Packaging’s existing strengths in the consumer and beverage markets.
Under the terms of the transaction, the purchase price equates to approximately 165 million USD. The transaction will be funded with existing cash and borrowings from Graphic Packaging's current revolving line of credit.
Benson Group operates four folding carton facilities in the UK that convert approximately 80,000 tons of paperboard annually.
Graphic Packaging said it expects to generate synergies of 5-7 million USD over the next 18 months. The acquisition is subject to standard closing requirements and is expected to close in the second quarter.
David Scheible, Graphic Packaging's chairman, president and chief executive officer, said: ‘We believe Benson Group fits perfectly with our strategy in Europe. The acquisition broadens our food and consumer products offerings and extends our reach into the store brand segment. 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 700 million USD.
‘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 US, 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, said: ‘This is a fantastic opportunity for Benson Group to become part of Graphic Packaging’s ambitious growth plans for Europe.
‘Graphic Packaging’s excellence in operations partnered with Benson Group’s success through unrivaled customer service will be a great combination. We are looking forward to working within an enlarged European business to deliver the benefits of both to our customers and achieve further success.’
Benson Group completed a management buy-out in December 2011 facilitated by investment from Lloyd’s Development Capital (LDC), with the sale to Graphic Packaging signaling LDC’s exit from Benson Group.
LDC, part of the Lloyds Banking Group, said the sale ‘provides an excellent return for LDC in just over two years’. Since investing in Benson Group, LDC has worked in close partnership with the management team led by Kerridge to implement a strategic plan focused on driving organic growth. This has largely focused on leveraging the business’ unique quick-response capabilities in the convenience food market, whilst maintaining the very highest standards of customer service and product quality.
Andy Grove, investment director at LDC, said: ‘This exit to Graphic Packaging represents an excellent outcome for Benson Group. Having worked closely with the management team for just over two years, we were keen to ensure the right strategic fit was achieved for the business and we are confident that we have delivered on this objective.’
Kerridge added: ‘We have enjoyed a close working relationship with the Midlands team at LDC in recent years, during which time they have been instrumental in helping us to deliver on our growth objectives. Their support and strategic input has been invaluable and Benson Group now has a strong foundation upon which to progress further.’
Benson Gateshead, the North East flagship site of Benson Group, recently gave details of its largest press investment ever with the purchase of an eight-color Heidelberg Speedmaster XL 106 B1 format perfecting press.
Benson Group will also be present at next week’s Packaging Innovations show in Birmingham, where it will debut Benson Delilicious, packaging aimed at the food-to-go market. Half of the 14-piece Benson Delilicious range is claimed to be of a unique design.
Read more news about Benson Group here.
Packaging Innovations 2014 takes place at the NEC, Birmingham on February 26-27.
The Benson acquisition is the latest step in Graphic Packaging’s move to grow its footprint in Europe. Graphic Packaging acquired the beer and beverage operations of Å&R Carton in late 2012 alongside the purchase of Contego Cartons in a move to create one of Europe's largest folding carton packaging businesses.
Graphic Packaging recently detailed the positive impact these acquisitions had had on its financial results and in creating ‘a platform for continued growth and market share gains in Europe’.
Nicholas Mockett, head of packaging M&A at corporate finance house Moorgate Capital, said: ‘Graphic Packaging has been building its presence in European carton converting in the last year, notably with its acquisition of Contego.
‘This transaction should provide enhanced relationships with the retailer supply chain community alongside its strong position with the large FMCG companies. Benson is a leading UK supplier of cartons to the supermarkets for retailer own brand labels and has experienced strong growth as the supermarkets prioritize their own brands through their multi-channel outlets, as retailers typically earn higher margins than from selling the famous name equivalent.’