Sonoco to Reduce Debt and Boost Portfolio With ThermoSafe Divestment

Core Insights - Sonoco Products Company (SON) has entered into a definitive agreement to sell its ThermoSafe business unit to Arsenal Capital Partners, aligning with its portfolio transformation and debt reduction strategy [1][9]. Business Overview - ThermoSafe specializes in packaging solutions for temperature-sensitive items, generating approximately $240 million in sales in 2024. The unit operates globally with 900 employees [2][4]. Strategic Implications - The divestment of ThermoSafe is part of Sonoco's ongoing efforts to optimize its portfolio, focusing on two core business segments: Global Metal and Fiber Packaging, which are leaders in their respective industries [3][6]. Financial Details - The total purchase price for the ThermoSafe unit is up to $725 million, with $650 million payable at closing on a cash-free and debt-free basis. An additional $75 million is contingent on meeting specific performance targets by the end of 2025 [4][9]. Leverage and Financial Health - Following the completion of the sale, Sonoco anticipates its net leverage ratio to decrease to approximately 3.5x, excluding potential additional payments [5][9]. Portfolio Streamlining - Sonoco is actively simplifying its business portfolio to enhance long-term profitability and return capital to shareholders, having previously sold its Thermoformed and Flexibles Packaging business for $1.8 billion [6][7]. Market Performance - Sonoco's stock has experienced an 11.4% decline over the past year, compared to a 10.8% decline in the industry [8].