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Acquisitions and divestitures | 12 Months Ended
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Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisitions and divestitures | Acquisitions and divestitures Acquisitions On December 1, 2023, the Company completed the acquisition of Inapel Embalagens Ltda., (“Inapel”), a manufacturer of single and multilayer materials for flexible packaging in Brazil for a net cash purchase price of $59,228, subject to customary working capital adjustments. With the acquisition of Inapel, the Company added approximately 500 employees and two manufacturing locations in the Sao Paulo region of Brazil. The financial results of Inapel are included in the Company’s Consumer Packaging segment. On September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging from joint venture partner WestRock and the acquisition of a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”) from WestRock for net cash consideration of $313,388. In December 2023, the Company agreed to a final working capital settlement of $452, which was paid to WestRock in January 2024. This working capital settlement is reflected in “Accrued expenses and other” in the Company’s Consolidated Balance Sheets as of December 31, 2023. Prior to completing the acquisitions, the Company held a 35% ownership interest in the RTS Packaging joint venture which was formed in 1997 and combined the former protective packaging operations of WestRock and Sonoco to market recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals. With the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill, the Company added approximately 1,100 employees and fourteen converting operations, including ten in the United States, two in Mexico, and two in South America, and one paper mill in the United States. The Company funded the acquisitions with borrowings under a new term loan credit facility and cash on hand. See Note 10 for more information. The financial results of RTS Packaging and the Chattanooga Mill are included in the Company’s Industrial Paper Packaging segment. On September 8, 2023, the fair value of the Company’s 35% interest in RTS Packaging was determined to be $59,472 based on the fair value of the remaining 65% equity interest in RTS Packaging adjusted for the deemed payment of a control premium, and the carrying value of the 35% interest was $8,654. The Company recognized a gain of $50,818 resulting from this remeasurement to fair value and the reclassification of certain amounts related to the Company’s 35% interest out of “Accumulated other comprehensive loss,” included foreign currency translation losses of $2,033 and losses related to defined benefit pension plans of $4,756. The Company also recognized a loss of $4,372 on the settlement of a contract with unfavorable terms at the time of the acquisition. The combined net gain of $39,657 is reflected in “Other income, net” in the Company’s Consolidated Statements of Income for the year ended December 31, 2023. The following table provides a summary of the purchase consideration (as defined under ASC 805) transferred for the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill:
| Purchase Consideration
Cash consideration, net of cash acquired | $ | 313,388 |
Fair value of previously held interest in RTS Packaging | 59,472 |
Final working capital settlement | 452 |
Settlement of preexisting relationships | 1,235 |
Purchase consideration transferred | $ | 374,547 |
The Company’s preliminary fair values of the assets acquired and liabilities assumed in the acquisition of the remaining interest in RTS Packaging, and the Chattanooga Mill, and Inapel acquisitions, as well as revised preliminary fair values reflecting adjustments made during the measurement period for RTS Packaging and the Chattanooga Mill, are as follows:
| RTS and Chattanooga Mill |  | Inapel
| Initial Allocation |  | Measurement Period Adjustments |  | Preliminary Allocation |  | Preliminary Allocation
Trade accounts receivable | $ | 17,488 |  |  | $ | — |  |  | $ | 17,488 |  |  | $ | 30,301 |
Other receivables | — |  |  | — |  |  | — |  |  | 6,088 |
Inventories | 20,209 |  |  | (947) |  |  | 19,262 |  |  | 9,269 |
Prepaid expenses | 2,720 |  |  | (589) |  |  | 2,131 |  |  | 1,430 |
Property, plant and equipment | 73,483 |  |  | 753 |  |  | 74,236 |  |  | 11,456 |
Right of use asset - operating leases | 34,604 |  |  | 290 |  |  | 34,894 |  |  | 217 |
Other intangible assets | 199,560 |  |  | (8,995) |  |  | 190,565 |  |  | 8,653 |
Goodwill | 92,657 |  |  | 14,909 |  |  | 107,566 |  |  | 15,704 |
Other assets | 2,465 |  |  | (412) |  |  | 2,053 |  |  | 793 |
Payable to suppliers | (7,320) |  |  | — |  |  | (7,320) |  |  | (15,899) |
Accrued expenses and other | (12,436) |  |  | (25) |  |  | (12,461) |  |  | (4,606) |
Accrued wages and other compensation | (2,731) |  |  | — |  |  | (2,731) |  |  | (1,127) |
Notes payable and current portion of long-term debt | (24) |  |  | — |  |  | (24) |  |  | — |
Noncurrent operating lease liabilities | (29,905) |  |  | — |  |  | (29,905) |  |  | (117) |
Pension and other postretirement benefits | (10,761) |  |  | (768) |  |  | (11,529) |  |  | — |
Long-term debt | (1,942) |  |  | — |  |  | (1,942) |  |  | — |
Deferred income taxes | (3,419) |  |  | (2,502) |  |  | (5,921) |  |  | (2,934) |
Other long-term liabilities | (3,293) |  |  | 1,478 |  |  | (1,815) |  |  | — |
Net assets acquired | $ | 371,355 |  |  | $ | 3,192 |  |  | $ | 374,547 |  |  | $ | 59,228 |
The preliminary allocations of the purchase price of the remaining interest in RTS Packaging, the Chattanooga Mill, and Inapel to the tangible and intangible assets acquired and liabilities assumed, as reflected in the table above, are based on the Company’s preliminary allocations of their respective fair values, based on information currently available. Management is continuing to finalize its valuation of certain assets and liabilities including, but not limited to: inventory; property, plant and equipment; goodwill; other intangible assets; and deferred income taxes, and expects to complete its valuations within one year of the respective dates of acquisition. Goodwill for RTS Packaging and the Chattanooga Mill, of which $87,191 is expected to be deductible for income tax purposes, consists of increased manufacturing capacity, access to certain markets, and the capability to support marquee customers in growing markets. Goodwill for Inapel, none of which is expected to be deductible for income tax purposes, consists of the ability to grow and improve the Company’s existing flexible packaging operation in Brazil. The Company has accounted for these acquisitions as business combinations under the acquisition method and has included the results of operations of the acquired businesses in the Company’s Consolidated Statements of Income from their respective dates of acquisition. The Company completed three acquisitions during 2022 at a net cash cost of $1,444,618. On November 15, 2022, the Company completed the acquisition of S.P. Holding, Skjern A/S (“Skjern”), a privately owned manufacturer of paper based in Skjern, Denmark for $89,610, net of cash acquired. Tangible assets totaled $40,489, intangible assets totaled $39,330, liabilities totaled $22,403, and Goodwill totaled $32,194. Skjern produces high-grade paperboard from recycled paper for rigid paper containers, tubes and cores, and other applications. On August 31, 2022, the Company completed the acquisition of Nordeste Tubetes and NE Tubetes (collectively “Nordeste”), two small tube and core operations in Brazil. Total consideration for the two businesses was $6,419. Tangible assets totaled $1,374, intangible assets totaled $3,031, and Goodwill totaled $2,014. The Company paid $3,933 at closing and recorded a deferred payment obligation totaling $2,486 in “Other liabilities” on the Company’s Consolidated Balance Sheets. The deferred payment obligation is expected to be paid by the end of 2028. On January 26, 2022, the Company completed the acquisition of Ball Metalpack Holding, LLC (“Ball Metalpack”), renamed Sonoco Metal Packaging (“Metal Packaging”), a leading supplier of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $1,348,589, net of cash acquired. Prior to the Company's acquisition, Ball Metalpack was a joint venture formed in 2018 and owned by Platinum Equity (51%) and Ball Corporation (49%). Metal Packaging consists of eight manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado. Factors comprising goodwill at Metal Packaging include increased access to certain markets as well as the value of the assembled workforce. During 2023, the Company finalized its valuations of the assets acquired and the liabilities assumed in the Metal Packaging, Skjern, and Nordeste acquisitions. As a result, the following measurement period adjustments were made to the previously disclosed preliminary fair values of assets acquired and liabilities assumed during the year ended December 31, 2023.
Measurement Period Adjustments for the year ended December 31, 2023 | Metal Packaging | Skjern | Nordeste
Other receivables | $ | — |  | $ | — |  | $ | (186) |
Inventories | (73) |  | 14 |  | (38) |
Property, plant and equipment | (247) |  | 4,921 |  | 494 |
Other intangible assets | — |  | (3,488) |  | 3,031 |
Goodwill | 439 |  | 3,135 |  | (3,400) |
Accrued expenses and other | (119) |  | (203) |  | — |
Taxes Payable | — |  | (3,416) |  | — |
Additional cash consideration | $ | — |  | $ | 963 |  | $ | (99) |
The Company accounted for all 2022 acquisitions as business combinations under the acquisition method and has included the results of operations of the acquired businesses in the Company’s Consolidated Statements of Income from the respective dates of acquisition. Financial results for Metal Packaging are included in the Company’s Consumer Packaging Segment, and financial results for Nordeste and Skjern are included in the Industrial Paper Packaging segment. Except for the Metal Packaging acquisition, the Company does not believe that the results of the businesses acquired in 2023, 2022, and 2021 were material to the years presented, individually or in the aggregate, and are therefore not subject to the requirements to provide supplemental pro-forma information. The following table presents the financial results for Metal Packaging from the date of acquisition through December 31, 2022:
Supplemental Information |  | January 26 to
Metal Packaging |  | December 31, 2022
Net sales |  | $ | 1,035,020 |
Net income |  | $ | 62,777 |
The following table presents the Company’s pro forma consolidated results for the years ended December 31, 2022 and December 31, 2021, assuming the acquisition of Metal Packaging had occurred on January 1, 2021. This pro forma information is presented for informational purposes only and does not purport to represent the results of operations that would have been achieved if the acquisition had been completed at the beginning of 2021, nor is it necessarily indicative of future consolidated results.
Pro Forma Supplemental Information |  |  | Years Ended
Consolidated |  |  |  | December 31, 2022 | December 31, 2021
Net sales |  |  |  | $ | 7,300,140 |  | $ | 6,425,771 |
Net income/(loss) attributable to Sonoco |  |  |  | $ | 528,818 |  | $ | (145,570) |
The pro forma information above does not project the Company’s expected results for any future period and gives no effect to any future synergistic benefits that may result from the combination or the costs of integrating the acquired operations with those of the Company. Pro forma information for the years ended December 31, 2022 and December 31, 2021 includes adjustments to depreciation, amortization, and income taxes based upon the final fair value allocation of the purchase price to Metal Packaging’s tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2021. Interest expense on the additional debt issued by the Company to fund the acquisition and retention bonuses incurred related to the acquisition are also included in the pro forma information as if the acquisition had occurred on January 1, 2021. Acquisition-related costs of $28,171 and charges related to fair value adjustments to acquisition-date inventory of $33,155 were recognized during 2022. These costs are excluded from 2022 pro forma net income and are instead reflected in 2021 pro forma net income as though the acquisition had occurred on January 1, 2021. The Company completed four acquisitions during 2021 at a net cash cost of $20,697. On December 30, 2021, the Company completed the acquisition of a recycling facility from American Recycling of Western North Carolina, LLC, a privately held company, for total cash consideration of $6,267. The facility, located in Asheville, North Carolina, primarily services western North Carolina and upstate South Carolina for the processing of recycled materials. On November 8, 2021, the Company completed the acquisition of D&W Paper Tube Inc., a privately owned manufacturer of paper tubes and cardboard cores, serving the carpet and textile industries and consisting of two manufacturing facilities in Chatsworth, Georgia, for total cash consideration of $12,787. The Company also completed two smaller acquisitions earlier in 2021. These included Allied Packaging on August 3, 2021, a manufacturer of paper packaging and related manufacturing equipment, consisting of a single manufacturing facility in Sydney, Australia, for total cash consideration of $802, and TuboTec on March 8, 2021, a small tube and core operation in Brazil, for total cash consideration of $841. The financial results for each of these acquisitions are included in the Company’s Industrial Paper Packaging segment from the respective date acquired. Divestiture of Businesses On July 1, 2023, the Company completed the sale of its U.S. BulkSak business, which consisted of the manufacturing and distribution of flexible intermediate bulk containers, plastic and fiber pallets, and custom fit liners and was a part of the Company’s Industrial Paper Packaging segment, to U.S. BulkSak Holdings, LLC. The cash selling price, as adjusted for the final working capital settlement, was $20,271 with cash proceeds totaling $18,271 received in 2023, and the remaining $2,000 held in escrow to be released to the Company within 18 months from the date of the sale, pursuant to the settlement of any indemnity claims. As a result of the U.S. BulkSak divestiture, the Company wrote off net assets totaling $13,437, including $3,333 of allocated goodwill, and recognized a pretax gain of $6,834 which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income. The escrow balance of $2,000 is reflected as a long-term receivable in “Other assets” on the Company’s Consolidated Balance Sheets as of December 31, 2023. Also on July 1, 2023, the Company agreed to the sale of its Mexico BulkSak business. The sale closed in December 2023 for a cash selling price, as adjusted for working capital, of $1,096. As a result of the Mexico BulkSak sale, the Company recognized a pretax gain of $85 which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income. On January 26, 2023, the Company completed the sale of its S3 business, a provider of customized waste and recycling management programs and part of the Company’s Industrial Paper Packaging segment, to Northstar, for total cash proceeds of $13,839. An additional $1,500 of proceeds are being held in escrow and will be released to the Company, pursuant to any indemnification claims, twenty months following the date of the divestiture. The Company wrote off net assets totaling $4,274 as part of the divestiture of the business, including $3,042 of allocated goodwill, and recognized a pretax gain of $11,065 during the first quarter of 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income. The escrow balance is reflected as a long-term receivable in “Other assets” on the Company’s Consolidated Balance Sheets as of December 31, 2023. The Company is also entitled to receive additional proceeds of $3,200 in the second quarter of 2024 if certain conditions are met. This contingent consideration will be recognized as an additional gain on the sale at the point the contingencies are resolved. On January 26, 2023, in connection with the sale of the S3 business, the Company acquired a 2.7% equity interest in Northstar valued at $5,000. This investment is being accounted for under the measurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes). The divestitures of the S3 and BulkSak businesses did not represent a strategic shift for the Company or have a major effect on its operations or financial results. Consequently, these sales did not meet the criteria for reporting as discontinued operations. The cash proceeds from the sales were used for general corporate purposes. On April 4, 2021, the Company completed the sale of its U.S. display and packaging business, part of the All Other group of businesses, to Hood Container Corporation. This business provided design, manufacturing and fulfillment of point-of-purchase displays, as well as contract packaging services, for consumer product customers and had approximately 450 employees across eight manufacturing and fulfillment facilities and four sales and design centers. The Company received net cash proceeds of $81,675 from the sale, wrote off net assets totaling $84,434, and recognized a loss on the divestiture of $2,759, before tax. On September 30, 2021, the Company completed the sale of its Plastics-Food thermoforming operation in Wilson, North Carolina to Placon for net cash proceeds of $3,528, resulting in the recognition of a gain on the sale of $92, before tax. These 2021 divestitures did not meet the criteria for reporting as discontinued operations. The Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic. Sale of Assets With the completion of Project Horizon, the Company’s project to convert the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard was realized. The Company now produces paper exclusively from recycled fibers and no longer requires natural tree fiber for production. Accordingly, on March 29, 2023, the Company sold its timberland properties, consisting of approximately 55,000 acres, to Manulife Investment Management for net cash proceeds of $70,802. The Company disposed of assets with a net book value of $9,857 as part of the sale, and recognized a pretax gain from the sale of these assets of $60,945 during the year ended December 31, 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income. Acquisition, Integration, and Divestiture-Related Costs Acquisition, integration, and divestiture-related costs of $26,254, $70,210, and $17,722 were incurred in 2023, 2022 and 2021, respectively. These costs include legal and professional fees, investment banking fees, representation and warranty insurance premiums, as well as employee-related and other integration activity costs, that are included in “Selling, general, and administrative expenses” in the Company’s Consolidated Statements of Income. The costs incurred in 2023 and 2022 also include fair value adjustments to acquisition-date inventory totaling $5,227 and $33,155, respectively, that are included in “Cost of sales” in the Company’s Consolidated Statements of Income.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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