Sonoco Products Buying Florida-Based Thermoformer

Sonoco Products Co. is expanding its PET thermoforming business with the acquisition of a Florida-based packaging maker.

The Hartsville, S.C.-headquartered company struck a $150 million deal for Highland Packaging Solutions Inc. of Plant City, Fla.

The purchase brings $90 million of annual business to Sonoco through one production facility and five warehouse locations in the Southeast and on the West Coast.

Buying Highland gives Sonoco an entry into the egg packaging market, which the company says is growing. Global consumption of eggs was 170 per person in 2014 and is expected to increase to more than 200 per person by 2021, the company said. Egg packaging was a $4.2 billion business two years ago and expected to be $5.35 billion in 2021, Sonoco said.

"Joining our two companies together will enable the best of both companies to be integrated and serve our customers, and will enable Highland to further enhance our speed to service and our ability to offer customers the most diverse consumer packaging formats and solutions in the industry," said Highland CEO Steve Maxwell in a statement.

Privately held Highland has been owned by Maxwell, John Durham and certain members of the company's leadership team, Sonoco said. The company has 425 workers. Along with eggs, the company also makes containers for produce, strawberries, blueberries, blackberries, raspberries, tomatoes and grapes. Brands using Highland containers include Dole, Eggland's Best, Driscoll's Naturipe and Well Pict.

About 70 percent of the company's business is in produce and 22 percent in eggs. Highland also has a labels business that accounts for 8 percent of sales.

Sonoco said adding Highland to the company's portfolio strengthens its presence in the perimeter of grocery stores as more shoppers spend more money there. Perimeter shopping includes fresh and natural foods that often demand higher prices than packaged goods in the center of stores. Perimeter sales also are outpacing interior store sales and growing.

"Highland's recognized best-in-class manufacturing and effectiveness in product integration with automated filling machines will add breadth to our growing produce customer mix through a dedicated manufacturing facility located in the important Florida produce market, while also providing us an important entry into egg packaging — a fast-growing protein source in North America," said Sonoco CEO-elect Rob Tiede in a statement.

Maxwell and Durham have known each other since 1985 when they met in Sinton, Texas, and became friends. Together, the two men purchased Highland Distribution Services Inc. in 2005, then a regional distributor of agricultural packaging products. Maxwell had worked there since 2003.

Sonoco said the deal will be accretive to earnings this year.

"The purchase price represents an EBITDA multiple of approximately 6.5 times post-synergies and tax benefits from the write-up of intangibles," Sonoco said in announcing the deal.