* Buying Rexam's cosmetics packaging unit for $459 mln
* Buying Paragon Print and Packaging for $244 mln
* Sun Capital hopes to raise $3 bln global fund-source
By Anjuli Davies
LONDON, Jan 2 Private equity firm Sun European
Partners has sealed two acquisitions in the packaging sector
totalling around $700 million, helping to consolidate an
industry battling to cut costs to cope with faltering demand.
Sun European, an arm of U.S.-based Sun Capital, said on
Wednesday it had received regulatory approval to buy the
cosmetics division of Rexam's personal care business and
that it was also buying Paragon Print and Packaging.
The deals bring Sun Capital's total number of deals in the
packaging sector globally to 34 since its inception in 1995.
Sun Capital which currently manages around $8 billion
globally, also hopes to raise $3 billion for a global fund to
invest across sectors by the end of the year, a person familiar
with the matter told Reuters.
"There is scope for consolidation in Europe," Davy
Stockbrokers' analyst Barry Dixon said of the packaging sector,
which has been hit hard by weak economies in the region.
"There's been a move towards higher-quality consumer
packaging especially given the rise of discount retailers such
as Aldi and Lidl who use consumer-ready packaging not just for
transporting goods but for shelving and marketing," he added.
This trend can been seen in a number of deals recently.
South Africa's Mondi Group bought German packaging
firm Nordenia International in July for $782 million in a push
to diversify the paper maker's presence in consumer packaging.
Britain's DS Smith, meanwhile, bought the recycled
packaging operations of Svenska Cellulosa Aktiebolaget
in January for 1.6 billion euros to win more business from the
world's top consumer goods companies.
British drinks can maker Rexam put its underperforming
personal care division up for sale in February in two parts for
a total of $709 million.
Sun European is buying the unit's cosmetics division through
its French-headquartered affiliate Albea for $459 million after
winning anti-trust approval by Chinese authorities.
Silgan Holdings agreed to acquire the unit's high-barrier
food packaging business for $250 million.
The cosmetics division operates 11 manufacturing sites
across Europe, the Americas and Asia and employs 6,500 people.
Terms of the transaction to acquire Paragon Print and
Packaging, which provides labels and packaging for food
retailers such as Waitrose and Tesco, were not disclosed but a
person familiar with the matter said the deal had an enterprise
value - debt plus equity - of 150 million pounds ($244 million).
Established in 1994 Paragon, with turnover of more than 170
million pounds, operates from 10 UK manufacturing sites and
employs about 1,200 people servicing around 1,800 customers.
Founder Tony Lennon will remain as an investor and adviser
and Chief Executive Mark Lapping will continue in his role.
Before the transaction, Paragon's management owned 51
percent of the company alongside Equistone Partners Europe with
a 34 percent stake and LDC with the remaining 15 percent.
In 2001, Equistone invested 12 million euros to buy a 50
percent stake in the packaging provider.