Canadian label and packaging maker CCL Industries to buy Innovia Group for $842 mn

Canadian label and packaging maker CCL Industries Inc yesterday struck a deal to buy Innovia Group, a UK-based supplier of new plastic £5 note to the Bank of England, for about C$1.13 billion ($842 million) in cash.

CCL is buying Innovia from a consortium of UK-based private equity investors managed by The Smithfield Group LLP.

CCL expects to fund the acquisition from existing revolving credit facility and a new $450 million, two-year term loan provided by a syndicate of banks led by Bank of Montreal.

Founded in 2004, Innovia manufactures biaxially oriented polypropylene (BOPP) and polymer banknote substrate and cellulose films for food packaging, tobacco overwrap, labels, and securities markets.

The Wigton, UK-based company provides flexible cellulose films, BOPP flexible films, BOPP filmlic substrates, metalised BOPP facestock films, standard acrylic films, shrink tightening films, snap wrap easy opening films, and uncoated collation films.

It supplies new plastic £5 note to the Bank of England, but vegetarians raised objections after they discovered that the notes contain animal fat.

Toronto Stock Exchange-listed CCL is the world's largest specialty label business with a market cap of C$8 billion.

It employs more than 20,000 people and operates from 156 production facilities across 35 countries on 6 continents.

CCL said that Innovia is likely to generate net revenue of about CA$570 million for next year.

"This transaction is another transformative acquisition for CCL, propelling the Company to world leadership in the disruptive, fast growing polymer banknote market while strengthening our depth in the materials science arena with proprietary BOPP films technology for the label, packaging and security sectors,'' said, Geoffrey Martin, president and CEO of CCL.

''We expect to find significant operational, customer and product innovation growth opportunities between Innovia and our end use facing businesses at CCL Label, CCL Design, Checkpoint and Avery," he added.