The Sterling Group, a private equity firm based in Houston, this month agreed to purchase the flexible packaging unit of International Paper(IP), which is being divested from the company’s consumer packaging group. The value and terms of the deal are undisclosed.
The packaging products from IP’s business are used for pet food, charcoal and lawn and garden products.
“The flexible packaging business has been a profitable asset for International Paper,” said Tom Gestrich, a senior vice president with IP’s consumer packaging group, in a statement. “We do regret that the business no longer fits into our long-term strategy, but I am confident that it will fit well with Sterling’s [strategy] and its philosophy for growth, value creation and employee ownership.”
The purchase, which is expected to close by the end of June, will be financed with equity, largely from Sterling Group Partners I LP, and debt. John Hawkins, a principal at The Sterling Group declined to name the debt providers. Hawkins said that the deal would give Sterling and the investors it brings in a majority stake in the company.
This is the first packaging company for The Sterling Group, which focuses on leveraged buyouts in basic industrial companies. Hawkins said the firm was not seeking out a packaging investment but saw the flexible packaging unit as a good opportunity.
The Sterling Group is currently raising Sterling Group Partners I LP, which has a target of $150 million. The fund held a first close on $110 million in February and expects a final close by the year’s end.