Sonoco, Texpack Form JV in Paper Cone Business

Sonoco and Texpack, a privately held company headquartered in Miami, FL, have completed an agreement to combine all their paper cone operations into a global joint venture, Conitex-Sonoco, to serve the textile industry worldwide. The pact was jointly announced yesterday by Joseph Artiga, Texpack chairman and CEO, and Peter C. Browning, president and CEO of Sonoco.

The joint venture anticipates annual sales in 1999 of approximately $100 million and is expected to be modestly accretive to Sonoco in 1999. Under the agreement, Conitex, a wholly owned subsidiary of Texpack, will contribute its paper mills in Contoocook, NH, Spain and Indonesia; cone operations in Gastonia, NC, the United Kingdom, Spain, Indonesia and Taiwan; and open-end spinning carrier operations in Cherryville, NC. Sonoco will contribute its cone operations in Hartsville, SC, Mexico, Colombia and Greece, plus its open-end spinning carrier business in Long Shoals, NC.

Although approximately 140 Sonoco employees will be impacted, the company anticipates handling redundancies through normal retirements, attrition, job transfers within Sonoco and into the new joint venture, and other options. The consolidation will be implemented in phases over the next 13 months. Under terms of the agreement, Texpack will own 70% of the joint venture and Sonoco will own 30%. Artiga will be chairman and CEO. At the end of four years, Sonoco will have the option of increasing its ownership to 49%.

Separate from the joint venture agreement, Sonoco will purchase Conitex's tube operations in Brazil and Taiwan. Both companies cited global over-capacity in the cone industry and the need for consolidation as key reasons for choosing a joint venture strategy. "The United States market for textile cones has been declining as textile businesses have continued to move to other countries, including China, Pakistan, India and Eastern Europe. By pooling our resources, we can improve our cost-effectiveness, thus making feasible investment in more efficient equipment needed to remain competitive in the domestic market while transferring existing equipment in the United States to other parts of the world," said Browning.