Canada-based company Transcontinental has agreed to acquire the Coveris Americas business unit of Coveris Holdings for $1.32bn.

Headquartered in Chicago, Illinois, Coveris Americas provides flexible packaging and other value-added products across North America.

The company focuses on manufacturing a variety of flexible plastic and paper products, including rollstock, bags and pouches, coextruded films, shrink films, coated substrates and labels.

The boards of both companies have approved the terms of the acquisition, which will allow Transcontinental to shift its focus to a lucrative flexible packaging business.

The deal adds Coveris Americas’ 21 production facilities to Transcontinental’s seven existing flexible packaging facilities.

These are located in the US, Canada, Ecuador, Guatemala, Mexico, the UK, New Zealand and China.

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Transcontinental board chair Isabelle Marcoux said: “Today’s announcement marks a turning point in TC Transcontinental’s 42-year history. This transaction crystallises our strategic shift toward flexible packaging and solidifies our commitment to profitable growth.

“This transaction crystallises our shift toward flexible packaging.”

“We are convinced that this transformational acquisition will be a driver in the creation of long-term value for all of our stakeholders.

“It is with pride that we begin the next chapter of our successful journey with Coveris Americas, its employees and customers, building on our values of respect, teamwork, performance and innovation.”

Subject to customary closing conditions and receipt of applicable antitrust approvals, Transcontinental is expected to complete the deal in the third quarter of 2018.

Last year, Coveris Americas generated $966m in revenues and $128m in adjusted EBITDA.

TC Transcontinental president and chief executive officer François Olivier said: “The acquisition of Coveris Americas adds significant depth and scale to our existing platform, with flexible packaging operations now expected to be our largest division in terms of TC Transcontinental’s pro forma revenues based on its fiscal year 2017.

“This transaction complements and bolsters our existing product offering in several flexible packaging end markets, including dairy, pet food and consumer products.”