The U.K. Competition and Markets Authority announced Thursday it’s investigating Sonoco’s planned acquisition of Switzerland-based metal packaging company Eviosys from KPS Capital Partners and Crown Holdings.
Sonoco first announced the $3.9 billion deal in June and expected it would close in the fourth quarter of 2024. CEO Howard Coker has said that adding Eviosys will position Sonoco “as one of the leading food can and aerosol packaging manufacturers globally.”
At the time of the acquisition announcement, Sonoco reported Eviosys had the top position in food cans in Europe, with revenue concentrated in Western Europe, selling majority cans and ends. Eviosys’ website lists multiple locations throughout the U.K., as does Sonoco’s.
The CMA says that it undertakes merger investigations when the combined businesses would have at least a 25% share of any reasonable market, or the deal involves a business being bought that has a U.K. “annual turnover” of at least 70 million pounds.
The CMA has an open comment period for the investigation through Nov. 7 and expects a deadline for a first phase decision by Dec. 19.
In the EU, the deal recently cleared the European Commission’s review process. “The Commission concluded that the notified transaction would not raise competition concerns, given the companies' limited market positions resulting from the proposed transaction,” it reported Tuesday.
Crown Holdings executives also recently referenced the deal. Crown has a 20% stake in Eviosys, due to the fact that private equity firm KPS, which is Eviosys’ current owner, created the company to acquire Crown’s European tinplate business in 2021. Crown expects to gain approximately $300 million in proceeds through the sale. CEO Tim Donahue previously said the company would likely use most of that money to buy back shares.
Crown CEO Tim Donahue noted during the company’s third-quarter earnings call last week that “with the Eviosys sale, we're going to lose a significant amount of equity earnings.” CFO Kevin Clothier also noted that “with the combination of free cash flow and the $300 million in proceeds from the previously announced Eviosys sale, we expect to end the year with net leverage below three times.”
Sonoco will host its third-quarter earnings call on Nov. 1.
