The Atlanta, Georgia-headquartered firm will fund the $165m deal, which is expected to close in the second quarter of the year, through existing cash and borrowings from its credit lines.
Benson Group, which is targeting sales of £120m in this financial year, employs more than 900 staff across four UK sites – Crewe, Gateshead, Newcastle and Bardon, where the group is headquartered. Its main focus is on folding cartons for the food and drink retail sector while its Crewe operation, Medica Packaging, manufactures products for the pharmaceutical sector.
In December 2011, managing director Mark Kerridge and commercial director Nick Benson led a management buyout of the business backed by Lloyds Banking Group’s private equity arm LDC, which took a “significant stake” in the group.
Under the deal announced today, Graphic has acquired 100% of the share capital of the business in what both LDC and Kerridge called “an excellent outcome for all parties”.
Kerridge said both he and Benson would continue to head Benson Group, within the Graphic Packaging framework, “to drive the success story forward”.
“Fundamentally we have established a reputation for unparalleled customer service in terms of reacting to short time-scales as well as major product launches. Graphic has recognised that and the value of the Benson brand,” he said.
This latest deal for Graphic Packaging further underlines the firm’s ambitions for European expansion after its £81m acquisition deal with Contego in November 2012. The US firm said the Benson acquisition would complement its existing food and drink business in Europe while generating $5m-$7m of synergies over the next 18 months.
On this Kerridge said: “Ultimately the newly combined business will deliver around £4m-£5m of synergies and that is fundamentally driven by size and scale opportunities in procurement and operational leverage. In terms of the Benson businesses themselves there will be no impact on the four UK sites in terms of any immediate restructuring. It is business as usual.”
While Benson Group currently exports only a small amount of its products to Europe, Kerridge said its new position within Graphic Packaging represented an excellent opportunity.
“It’s clear to us that Graphic is looking to further develop its European business and we look forward to supporting them. The Benson brand will be used to further develop the convenience/retail sectors across Europe,” he added.
Graphic Packaging chief executive David Scheible, said: “I am delighted to announce that Benson Group will now form part of Graphic Packaging’s growing presence in Europe. Benson Group has a great reputation, world-class assets, and a very effective management team.
“This acquisition is a key part of our strategic growth plan and will give us a strong position in the convenience/retail market to complement our core strengths in consumer and beverage.”
Nicholas Mockett head of packaging mergers and acquisitions at Moorgate Capital said: “Graphic Packaging, the leading cartons company in the US, has been building its presence in European carton converting in the last year, notably with its acquisition of Contego.
“The acquisition of Benson Box should provide enhanced relationships with the retailers to complement its strong position with the large FMCG companies.”
