Graphic Packaging International has agreed to acquire all the assets of the foodservice business of Letica, a subsidiary of RPC Group, for $95m.
Image: Graphic Packaging to buy Letica foodservice business from RPC. Photo: courtesy of rawpixel on Unsplash.
Letica Foodservice produces paperboard-based cold and hot cups and cartons for the foodservice market in North America.
The company operates two foodservice converting plants in Clarksville, Tennessee and Pittston, Pennsylvania.
Graphic Packaging said the Letica foodservice business generated $110m in revenue and converted about 40 thousand tons of solid bleached sulfate (SBS) paperboard in the twelve months ended 30 June 2018.
The company noted that the acquisition will drive synergies with the integration of further SBS paperboard tons, reduced logistics costs, and other cost efficiencies.
Graphic Packaging president and CEO Michael Doss said the transaction will further diversify the company’s customer base, enhance its geographic footprint, and provide required capacity to meet the incremental demand for paper cups resulting from the ongoing shift out of polystyrene foam.
Doss said: “The transaction is consistent with the strategy we outlined after the combination with the SBS mill and foodservice assets that closed on January 1, 2018, specifically, our intent to grow our foodservice business organically and through acquisitions and drive higher integration levels for our SBS mills.”
The transaction, which is anticipated to close in the third quarter of 2018, is subject to standard closing conditions and regulatory review.
UK-based RPC Group, which acquired US firm Letica Group in 2017 in an agreement worth up to $640m, is planning to offload non-core units to return money for its shareholders.
Earlier this month, RPC acquired PLASgran, a UK-based recycler of rigid plastics, for £34.5m.
As a result of the divestment of the foodservice business, RPC signed an agreement to settle the earn-out related with the group’s acquisition of Letica in March 2017.
RPC said it will pay an amount of $7.5m to the former shareholders of Letica after completion of the sale of foodservice business.
RPC is a plastic products design and engineering company, which focuses on packaging and selected non-packaging markets.