January 1, 2013 9:57 pm

Sun European set to buy Paragon

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Sun European Partners is to purchase Paragon Print and Packaging, which makes labels and packaging for food retailers such as Tesco and Sainsbury.

The deal, which takes the buyout fund close to 30 acquisitions of packaging company globally, values Paragon at about £150m, according to a person with knowledge of the sale.

The terms of the transaction have not been disclosed.

With its experience in the sector, Sun European, the European affiliate of US private equity group Sun Capital Partners, is hoping to drive growth of the business in new markets.

Paragon operates from eight UK manufacturing facilities, employs about 1,100 staff, and has a turnover of more than £170m.

The acquisition comes after Sun European kicked off a round of fundraising.

According to a person with knowledge of the plans, the group hopes to raise $3bn for a global fund by the end of this year. The fund will be looking to use this latest acquisition as evidence that it is finding investment opportunities in Europe despite difficult conditions for dealmaking. Sun European declined to comment on the fundraising.

Before the deal, the management team had owned 51 per cent, with private equity funds Equistone and LDC owning 34 and 15 per cent stakes respectively.

Equistone has been invested in Paragon since 2001, when it spent €12m on a 50 per cent stake. Neither LDC nor Equistone commented.

Paragon’s management will retain a minority stake, with Mark Lapping staying on as chief executive.

“We are looking forward to working with the team at Sun European Partners to further build on our market-leading position,” said Mr Lapping in an interview.

Philippe Neuschaefer, vice-president at Sun European, said: “Paragon is an excellent business, with an impressive management team holding market-leading positions in a number of key industry segments, most notably food labelling . . . We are looking forward to helping Paragon expand its leading position in the labelling market and establish itself even further in the areas of film and lined board to create a diversified industry champion.”

The fund is also set to confirm the closing of its acquisition of Rexam’s cosmetics, toiletries and household care products business for $459m after the deal was cleared by the authorities in China.

The division has been merged with Albéa, the French-headquartered packaging business owned by the buyout group, in a deal that makes it one of the world’s largest personal care packaging businesses with its combined revenues in excess of $1.5bn.

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