Diversified packaging company Sonoco has agreed to divest its Europe contract packaging business for $120m in cash.

The sale is part of the company’s strategy to streamline operational structure and further develop its core Consumer and Industrial packaging businesses.

Sonoco is expected to use the net proceeds from the sale to lower short-term debt and strengthen its liquidity position.

Wisconsin-based contract packaging and manufacturing firm Prairie Industries is acquiring Sonoco Poland Packaging Services business.

The business employs nearly 2,600 employees and operates six contract packaging facilities in three locations and a warehouse all in Poland.

A part of Sonoco’s Display and Packaging segment, it specialises in providing full-service custom packaging and supply chain management solutions.

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Sonoco president and chief executive officer Howard Coker said: “Since opening our Europe contract packaging business with a single customer 20 years ago, we have built this business to serve some of the best known global consumer product brands supplying consumers in more than 40 countries in Europe, the Middle East, Africa and Asia.

“I want to thank our dedicated management team and employees in our contract packaging operations in Poland for their contributions to Sonoco and wish them the best as part of the Halifax family of companies.”

The deal is dependent on meeting standard closing conditions and is expected to close in the fourth quarter of this year.

In August this year, Sonoco acquired France-based privately owned designer and manufacturer of sustainable paper packaging Can Packaging for a total consideration of €41.7m.