Sonoco bets of healthcare market growth with US$187 million acquisition of TEQ

03 Jan 2020 --- Global diversified packaging supplier Sonoco has completed the acquisition of Thermoform Engineered Quality and Plastique Holdings (together TEQ) from ESCO Technologies for US$187 million in cash. TEQ is a global manufacturer of thermoformed packaging, serving healthcare, medical device and consumer markets.

TEQ, headquartered in Huntley, Illinois, US, produced sales of US$87 million in the fiscal year ended September 30, 2019. The company operates three thermoforming and extrusion facilities in the US along with a thermoforming operation in the UK, and thermoforming and molded-fiber manufacturing in Poland. Each facility has state-of-the-art cleanroom capabilities enabling the production of sterile, barrier packaging systems for pharmaceuticals and medical devices.

TEQ also produces recyclable, molded-pulp-fiber packaging and thermoformed plastic packaging for multiple consumer products, primarily in Europe. The company has approximately 500 associates.

“The fast-growing healthcare packaging space is a key area of growth for Sonoco and with the addition of TEQ we now have a suite of products and services available to become a much larger supplier to healthcare and medical device manufacturers,” notes Rob Tiede, Sonoco President and CEO.

“Entering 2020, Sonoco Healthcare Packaging group now includes TEQ’s broad capabilities, along with our best-in-class ThermoSafe temperature-assured pharmaceutical packaging; injection-molded vials, multi-cell cuvettes and appliances; thermoformed trays for medical devices and OTC medical products; and our Alloyd heat-sealing equipment for commercial medical applications.”

Sonoco funded the TEQ transaction using short-term credit facilities and it is expected to be accretive to Sonoco’s 2020 earnings. TEQ President Randy Loga and his leadership team will remain with Sonoco and TEQ’s financial results will be reported within Sonoco’s Consumer Packaging segment.

Growth expected in healthcare packaging market
Recent studies value the global healthcare packaging market at approximately US$33 billion and healthy growth is expected for the future, Tiede explains. He points to increased life expectancy, the steady introduction of new products from medical device manufacturers and pharmaceutical companies, combined with requirements for improved safety and compliance, as drivers in market growth.

“The US and Europe will remain the largest consumers of healthcare packaging as new sophisticated therapies with specialized packaging needs continue to be introduced,” adds Randy Loga, President of TEQ.

“Surgical operations are also increasing due to a growing aging population, and with that comes the demand for more medical devices, which should strengthen the segment for the foreseeable future. TEQ’s history of growth mirrors the growth in healthcare spending and medical device utilization and we look forward to joining Sonoco in further expanding our capabilities to meet our customers’ future needs.”

In other Sonoco news, the supplier recently joined 4evergreen, an international industry alliance dedicated to boosting the role of fiber-based packaging to create a circular and more sustainable economy that reduces climate change and other environmental impacts. Launched and hosted by Cepi, the association representing the European paper industry, 4evergreen aims to generate awareness about the benefits of fiber-based packaging materials, advocate for European legislation supporting product design for recyclability and stimulate the development of optimized collection systems and appropriate recycling infrastructures.

Edited by Joshua Poole