The new entity will bring together more than 7,000 employees globally operating out of over 50 manufacturing sites and generating more than $1.4bn a year in sales. The deal is expected to be completed in the first quarter of 2014.
Both businesses will produce a range of packaging including printed folded cartons, labels, inserts and leaflets, rigid boxes and specialist packaging for the pharmaceutical and healthcare, consumer, personal care, confectionery, spirits and multimedia end-markets.
Globally, the focus of the combined business will centre on the US and Europe, although it intends to expand its reach in emerging markets including an existing presence in China.
The company will be headed by chief executive of US-headquartered MPS, Marc Shore, while Chesapeake chief executive Mike Cheetham and MPS president Dennis Kaltman will be co-presidents, reporting to Shore.
“The combined manufacturing footprint and technological capabilities are truly unique and will position us to match our customers’ needs with a broader range of products and operational flexibility,” said Shore.
“The ability to produce these goods and services in the US, Europe and China will also give our customers consistency on a global basis. We are very excited to bring these two families of passionate, hardworking and committed employees together as they will ensure our future success.”
Nottingham, UK-headquartered Chesapeake employs around 5,000 people worldwide and has 38 paperboard packaging sites across the UK, Europe and the US, while MPS has 16 manufacturing sites in the US and Europe with around 2,500 employees.
Ownership of the combined business will be equally divided between MPS management and MPS private equity owner Madison Dearborn, Chesapeake management and private equity firm The Carlyle Group, which bought the paper and board operations of Chesapeake in July this year. The deal did not include Chesapeake's £60m-turnover speciality chemicals packaging division.
Cheetham said: “I’m excited about the prospects this transaction offers for our collective customers, employees and suppliers.
“Both companies have benefited from a strong ongoing investment programme and will continue to invest in order to deliver on the considerable growth opportunity this merger presents. Our extensive global network of dedicated operations provides our customers with a strategic partner for their long-term needs.”
