Packaging specialist Chesapeake sold to private equity firm

pharmafile | July 4, 2013 | News story | Manufacturing and Production Chesapeake, carlyle group, packaging 

Packaging specialist Chesapeake has been sold to private equity firm Carlyle Group in a move designed to accelerate the company’s expansion on the international stage.

Nottingham, UK-headquartered Chesapeake employs nearly 5,000 people across 38 sites in nine countries and produces paper leaflets, labels and cartons for the pharmaceutical industry as well as companies in other sectors such as foods and beverages. It has more than 20 manufacturing facilities in the US, Europe and Asia serving pharmaceutical customers.

Carlyle has picked up Chesapeake from current owners Irving Place Capital and Oaktree Capital Management, which rode to the rescue of the firm in 2009 when it was under threat of bankruptcy and crippled by a high debt burden that was generating nearly $50 million in interest every year.

Irving and Oaktree paid around $485 million for the business at the time, but none of the parties has divulged the value of the Carlyle transaction. The price is likely to represent a healthy profit for Irving and Oaktree, however, as Chesapeake has grown rapidly in the last few years and posted sales of €580 million (around $755m) last year.

The acquisition by Carlyle comes at a time when global demand for pharmaceutical packaging is expected to grow by around six per cent a year over the next five years, to reach $90 billion, according to data from market research group Freedonia.

Managing director of Carlyle Europe Partners, Eric Kump, said the aim is to “further develop the company’s international footprint”.

Chesapeake’s fast growth comes on the back of considerable investment in new printing technologies, including a flexo label press at its operations in Wrexham, Wales, and Fairfield in New Jersey, as well as a digital label press at its Bourne facility in Lincolnshire, UK, and seven-colour carton printing press in Limerick, Ireland.

“Carlyle’s backing will support our aspirations to build upon our strong investments over the past three years as we further grow and develop our business,” commented Chesapeake chief executive Mike Cheetham.

The deal comes in the wake of a series of major deals affecting the UK packaging sector in recent months, with Contego Healthcare being acquired by Filtrona (now Essentra) for £160 million, and sister company Contego Cartons being acquired by Graphic Packaging of the US for £81 million.

Phil Taylor

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