The European subsidiary of US-based packaging solutions provider Graphic Packaging has agreed a $165m deal to buy UK-based food and healthcare packaging manufacturer Benson Group.

Benson has recorded twelve-month sales revenues of approximately $200m and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of nearly $25m.

With the transaction Graphic Packaging aims to enhance its packaging offerings for food and consumer products in the European market and also extend its business into the store brand segment in Europe.

The transaction is expected to generate $5 to $7m worth of synergies in the next 18 months, and would also result in the creation of over $700m of combined sales business in Europe.

Additionally, the proposed acquisition will help the company to further integrate its coated unbleached kraft paperboard, complementing the existing packaging business in Europe for food and drinks products.

Graphic chairman, president and chief executive officer David Scheible said that once the transaction completes, both the firms will see combined sales of over $700m in the European folding carton business.

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"This combination also allows us to broaden our customer base and to offer our current global customers a wider range of new products and services," Scheible added.

The transaction is expected to close in the second quarter of 2014.