British plastic packaging supplier RPC has signed an agreement to divest the foodservice business of its subsidiary Letica to Graphic Packaging International for $95m.

The foodservice business produces paperboard-based cold and hot cups and cartons for foodservice clients in North America.

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The acquisition will add two foodservice converting facilities in Clarksville, Tennessee and Pittston, Pennsylvania to Graphic Packaging’s portfolio.

For the 12 months period ending on 30 June this year, the business generated revenues of $110m and converted around 40,000t of solid bleached sulfate (SBS) paperboard.

Graphic Packaging expects the acquisition to deliver synergies fuelled by the integration of additional SBS paperboard tonnes, lower logistics costs, and other cost efficiencies.

Graphic Packaging president and CEO Michael Doss said: “We are excited to announce the acquisition of the Letica Foodservice assets as it extends our leading position in the growing paperboard-based foodservice market in North America.

“The transaction will further diversify our customer base, enhance our geographic footprint, and provide needed capacity to meet the incremental demand for paper cups resulting from the ongoing shift out of polystyrene foam.

“We are excited to announce the acquisition of the Letica Foodservice assets as it extends our leading position in the growing paperboard-based foodservice market in North America.”

“The transaction is consistent with the strategy we outlined after the combination with the SBS mill and foodservice assets that closed on 1 January 2018, specifically, our intent to grow our foodservice business organically and through acquisitions and drive higher integration levels for our SBS mills.”

Upon completion of the transaction, RPC is required to make a payment of $7.5m to the former shareholders of Letica to settle the earn-out related to its acquisition of Letica in March last year.

RPC is also on course to sell other non-core businesses, including the spirits closures business at Bridge of Allan, Scotland, and its European injection-moulding automotive business.

Earlier this month, the company acquired UK-based rigid plastics recycler PLASgran for £34.5m.