Cascades to Sell Dopaco to Reynolds Group for $400 million
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Cascades Inc., Kingsey Falls, Que., Canada, reported this week that it has entered into an agreement for the sale of Dopaco Inc., its converting business for the quick-service restaurant industry, to Reynolds Group Holdings of Auckland, New Zealand, for a cash price of $400 million. Dopaco is a producer of cups and folding cartons for the quick-service restaurant and food service industries. It operates six plants (two in Ontario and four in the U.S.) and converts some 165,000 metric tons of boxboard a year.
Net proceeds from the transaction will mainly be used to pay down Cascades' debt. In connection with the transaction, Cascades says it will continue to supply boxboard to Dopaco, through a five year supply agreement.
Alain Lemaire, president and CEO of Cascades, said that "while we have always considered our ownership in Dopaco to be a good investment, I am pleased to announce this transaction which unlocks significant value for our shareholders. In fact, this divestiture is part of our overall strategy to gain more financial flexibility and streamline our portfolio of assets to pursue the development of our core tissue, packaging and recovery operations. This is why the net proceeds will be used to reduce debt. Our improved balance sheet combined with the recent refinancing of our credit facility will allow us to position our asset base amongst the best in the industry in terms of productivity and profitability."
The transaction is expected to close before the end of April 2011, subject to the satisfaction of customary conditions and regulatory approvals. "Cascades and Reynolds Group have made every effort to ensure the transfer of ownership will be seamless for the customers of Dopaco," Lemaire added.
Founded in 1964, Cascades produces, converts, and markets packaging and tissue products. The company employs some 12,500 people at more than 100 units located in North America and Europe.
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