SIG to acquire Scholle IPN for €1.36B to unlock bag-in-box market potential

02 Feb 2022 --- SIG Combibloc (SIG) is set to acquire bag-in-box producer Scholle IPN for €1.36 billion (US$1.54 billion). The transaction is expected to close before the end of Q3 2022, subject to customary closing conditions.

Ingo Büttgen, head of corporate communications at SIG, tells PackagingInsights the aseptic carton packaging company’s strategy is clear: “We are focused on organic growth and only on highly selective acquisitions that have high synergies, a solid fit with our business and a clear [environmental] sustainability element.”

“Scholle IPN fits perfectly in this strategy. This is a strategic acquisition, but we are now focused on driving organic growth on this new platform.”

The combined companies will operate under the name “SIG,” employing nearly 8,000 people in 69 sales and manufacturing sites across the globe.

The businesses will service blue-chip customers on six continents, utilizing shared technology and R&D capabilities in renewable paper substrates, film extrusion, injection molding, and filling equipment, backed by industry 4.0 manufacturing. Around 70% of Scholle IPN’s revenues are in food and beverages.

“The Scholle IPN acquisition… is consistent with our strategy of geographic and category expansion accompanied by share gains in key markets,” comments Samuel Sigrist, SIG’s CEO. “By delivering clear benefits for customers, consumers, and the environment, we will drive value for shareholders.”The combined companies will employ nearly 8,000 people in 69 sales and manufacturing sites across the globe.

Unlocking bag-in-box
SIG indicates the acquisition diversifies its exposure to growing and resilient end markets. Its food and beverage carton solutions will be expanded into bag-in-box and spouted pouches for retail, institutional and industrial customers.

Büttgen explains that SIG and Scholle IPN have many similarities and are highly complementary businesses in terms of packaging portfolios, market segments, and customer bases.

“Together with our decades of experience and engineering excellence in aseptic technology and systems integration, the combined businesses will grow stronger and innovate faster than they ever could alone and broaden each other’s market access,” he says.

“Scholle IPN adds bag-in-box and pouches – a high-growth product in emerging markets that SIG can unlock access to for Scholle IPN – to SIG’s existing cartons portfolio.”

“Both [portfolios] have exposure to similar consumer end markets (dairy and food), and Scholle IPN will broaden its access to new complementary end markets (foodservice, water, wine and non-food).”

Combining across geographies
SIG and Scholle IPN will also expand their geographical reaches, empowering the combined company to deliver on different types of aseptic packaging across different geographies more efficiently.

Scholle IPN has a strong base in North America and Europe but limited presence in emerging markets, explains Büttgen. Meanwhile, SIG has a well-established sales and technical service platform that is complimentary in these markets.Scholle IPN recently partnered with LactaLogics to produce pharmaceutical-grade packaging for human milk-based nutrition products.

“SIG’s sales and service model in Asia, the Middle East and LATAM will help accelerate Scholle IPN’s business growth in these markets for both pouches and bag-in-box,” he says. “The expansion opportunity in Asia Pacific is further strengthened by our recent acquisition of Pactiv Evergreen’s Asia Pacific Fresh operations.”

“SIG will benefit from Scholle IPN’s number one market position in North America for bag-in-box with standalone growth opportunities, with the move from rigid to flexible packaging in foodservice applications. Both will enjoy cross-lead generation opportunities in the EU, APAC, MEA and LATAM.”

A strong financial platform
During the acquisition announcement, SIG reported strong preliminary results for the full year 2021. Core revenue was €2,047 million (US$2,309 million), representing a like-for-like increase of 6.6% at constant currency.

Adjusted EBITDA increased to €571 million (US$644 million) with an adjusted EBITDA margin of 27.7%, compared with 27.4% in 2020. Free cash flow was €258 million (US$291 million) compared with €233 million (US$263 million) in 2020.SIG and Scholle IPN enjoy exposure to similar consumer end markets, namely dairy and food.

SIG’s €1.36 billion (US$1.54 billion) agreement to acquire 100% of Scholle IPN, a privately held company, will be funded through 33.75 million SIG shares issued from existing authorized capital and €370 million (US$417 million) cash.

Ross Bushnell, Scholle IPN’s president and CEO, will continue to lead the legacy Scholle IPN business and join SIG’s Group Executive Board upon transaction close. Bushnell comments: “SIG and Scholle IPN are highly complementary businesses in terms of market approach and the importance of [environmental] sustainability of our products.”

“I believe that the combination of entrepreneurial spirit, nimble market response, and shared R&D capabilities will enable us to accelerate innovations for our customers and cement our collective market leadership in [environmentally] sustainable packaging solutions – particularly across aseptic and mono-material offerings, which are key to packaging for the circular economy.”

SIG recently launched the world’s first aluminum-free full barrier packaging materials for aseptic carton packs, suitable for oxygen-sensitive products like fruit juices, nectars, flavored milk or plant-based beverages.

By Joshua Poole