Sonoco to buy protective packaging firm for $550 million

(Reuters) - Plastic packaging producer Sonoco Products Co (SON.N) will buy privately held Tegrant Corp for $550 million in its largest acquisition yet to expand into the market for protective-packaging products such as molded foam and blister packs.

Sonoco, which is buying Tegrant from private equity firm Metalmark Capital, said the deal would add to its adjusted earnings from 2012 by 10 cents a share.

The combined company will have a total revenue of $5 billion in 2012.

DeKalb, Illinois-based Tegrant, the maker of Protexic and ThermoSafe brands, serves the consumer electronics, automotive, pharmaceuticals and food industries.

It operates more than 30 manufacturing, design and testing facilities in the United States, Mexico and Ireland and employs more than 2,000 employees.

New York-based MetalMark, established by the principals of Morgan Stanley Capital Partners, invested in Tegrant in February 2007. It also has put money into Silgan Holdings (SLGN.O), which makes packages for consumer goods.

"Sonoco's combined protective packaging businesses will represent approximately 11 percent of Sonoco's projected 2012 sales and further enhance our ability to grow in both consumer and industrial markets globally," CEO Harris DeLoach said in a statement.

Consolidation among packaging companies has been building in a rapid pace due to the shift from metals to plastics.

In June, Reynolds, part of New Zealand billionaire Graeme Hart's Rank Group, won the race to acquire Graham Packaging Co Inc GRM.N after it raised its offer to $1.68 billion and Silgan failed to make a counter bid.

Macquarie Capital served as financial adviser to Sonoco, while Tegrant was represented by Sagent Advisors. '

(Reporting by A. Ananthalakshmi in Bangalore; Editing by Saumyadeb Chakrabarty)