The sale is subject to the usual regulatory approvals, but is expected to be completed in Q4 this year. The acquisition includes $925m (£715m) in cash and Constantia Flexibles will also receive 16.6% of Nasdaq-listed Multi-Color’s outstanding shares upon completion, becoming its largest shareholder as a result.

Constantia Labels operates 23 sites across 14 countries, employing circa 2,800 staff generating sales of €605m last year. Its UK operation includes 170-staff Spear Europe, which in its most recent accounts had sales of £57m.

Multi-Color has worldwide sales of $923m and operates 45 factories across the globe with a 5,500-strong workforce. Its UK operation includes sites in Daventry and Scotland, including John Watson & Co in Glasgow, which it acquired in 2013. Its UK operations have combined sales of £42m, not including its three sites in Ireland.

The combined business will have global sales of $1.6bn and EBITDA of $300m.

Upon completion, two representatives of Constantia Flexibles will joing the Multi-Color board and Mike Henry, executive vice-president of Constantia Labels will become chief executive elect of Multi-Color in anticipation of current chief executive Vadis Rodato retiring in early 2018. Nigel Vinecombe will remain executive chairman of Multi-Color.

“This is an exceptionally good deal for Multi-Color, both strategically and financially,” said Vinecombe.

“Strategically because it gives us the best global food and beverage label platform in the largest label segment, because it gives us much larger scale and reach as a group, much greater diversity both in markets and geography and there are no customer concentration issues across the two businesses because it complements our [Multi-Color’s] home and personal care, wine and spirit and healthcare segments with Constantia’s food and beverage segment via common technologies, common supply and suppliers and common processes.”

Vinecombe also hinted the deal could spark more M&A by providing an “additional acquisition pipeline” in the food and beverage label sector.

“There are many acquisitions that make very good sense to add to this platform [Constantia] that would make less sense without it.”

Constantia Flexibles Alexander Baumgartner said the sale of its labels division would also enable the business to look at M&A deals, but in its core flexible packaging segment.