Packaging solutions provider Graphic Packaging has announced an agreement to acquire the European Food Carton business of UK-based Contego Cartons for £71m.

Under the terms of the deal, the company will also assume about £10m in net liabilities in an all cash transaction, to be funded with existing cash and debt under its current revolving line of credit.

Graphic Packaging president and chief executive officer David Scheible said the acquisition of Contego’s Food and Consumer Carton business extends the company into new end markets and expands its global footprint, besides providing new growth opportunities.

"There are solid synergies in this combination and we believe the Contego Cartons acquisition is an important step in strengthening our competitive positioning in Europe," Scheible said.

According to the US-based Graphic Packaging, the combination of its existing European business focused in the beverage markets with Contego’s market share position in the food and consumer products markets will allow the company to expand its customer base.

The company, which also proposes to optimise its supply chain footprint, plans to increase its European business around food and beverage markets.

Contego operates three folding carton facilities, two in the UK and one in the Netherlands, which annually convert about 150,000t of paperboard into folding cartons for the product industries including food and consumer.

The acquisition, which is expected to close in December 2012, is subject to standard closing requirements.

Graphic Packaging produces folding cartons and holds a position in coated-unbleached kraft, coated-recycled boxboard multi-wall bag and specialty packaging.