Why US Investors Should Keep An On The Sonoco (NYSE: SON)/Eviosys Merger

Sonoco Products (SON) has taken a savvy step forward. The metal packaging solutions provider announced its $3.9 billion acquisition of Eviosys, a European food cans producer. This strategic move aims to establish Sonoco as a global leader in metal food cans and aerosol packaging. The acquisition aligns with Sonoco's core business focus and scaling strategy.

In a parallel move, Sonoco plans to sell ThermoSafe packaging and other units, aiming to generate at least $1 billion from these sales over the next 12-18 months. This divestment underscores Sonoco's commitment to streamlining its operations to focus on core businesses.

Why This Deal Makes Sense

Eviosys is a company committed to sustainability and inclusivity. It holds the largest metal food can production presence in the EMEA region, and merging with Sonoco would give it global reach. Eviosys innovations include lightweight and sustainable metal caps and easy-to-open metal lids. The company is projected to generate $2.5 billion in revenue and $430 million in adjusted EBITDA for the current year, representing significant growth since 2021. The acquisition price implies a 7.3x multiple over its 2024 adjusted EBITDA.

For Sonoco, this acquisition represents a major step in its growth strategy and sustainability focus. Sonoco anticipates $100 million in value from the deal and expects it to boost its 2025 bottom line by over 25%. This acquisition builds upon Sonoco's previous purchase of Ball Metalpack in 2022, further solidifying its market position.

Zooming Out

Despite these significant moves, Sonoco's stock price has remained relatively stable over the past year. Most of Wall Street maintains a Moderate Buy consensus rating on Sonoco stock, with an average price target of $60.75. However, Zacks Investment Research declares SON a Sell, based on its shares dropping 3.7% in the last year, compared to the manufacturing industry’s 11.2% growth. Shares are currently trading down by 1.91% at $52.28. Time will tell whether the merger will be beneficial. Sonoco’s acquisition, subject to approvals, is expected to close by the end of the year.

Neither Julie Stoller nor Stocks.News have positions in this company.