Essentra PLC (LSE:ESNT) said it will sell its packaging businesses ESNT Packaging & Securing Solutions Limited and Essentra Packaging US Inc and their respective subsidiary companies to Austria-based Mayr-Melnhof Group for £312mln in cash and debt free consideration.
The sale is part of Essentra's previously announced strategic review, to help the firm "become a pure play components
business," with the transaction subject to various conditions including a shareholder vote.
It is expected to close in the fourth quarter of this year.
Essentra's board intends to use the proceeds to further strengthen its balance sheet, with the company adding the strategic review of its filters division is progressing in line with expectations.
"Essentra has a bright future as a global leading manufacturer and distributor of components with a clear strategy and significant opportunities to accelerate growth and expand market share," said Paul Forman, chief executive.
The Mayr-Melnhof (MM) group is a carton producer based in Austria, and the acquisition is set to help the firm grow in resilient segments such as pharma secondary packaging as well as strengthen its position in the European pharma carton market.
A key position in the East-Coast pharma hub will be acquired as well, which will expand MM's footprint into the US market.
Prior to completion of the transaction, Essentra will undertake a group reorganisation to achieve the separation of packaging from the remainder of the Essentra group by transferring certain assets that are currently part of packaging to the retained Essentra group, and transferring certain other assets currently part of the Essentra group to packaging.
Shares rose 0.92% to 275p in early trades.