Canada's CCL to buy UK-based Innovia for C$1.13 billion

(Reuters) - Canadian label and packaging maker CCL Industries Inc (CCLb.TO) said it would buy Innovia Group, whose unit is the supplier of Bank of England's new plastic five pound note that has fallen foul with vegetarians, for about C$1.13 billion (£680.2 million).

U.K.-based Innovia Group is a maker of speciality bi-axially oriented polypropylene films used for labels, packaging and security applications.

The deal propels CCL to world leadership in the disruptive, fast-growing polymer banknote market, Chief Executive Officer Geoffrey Martin said in a statement on Monday.

Innovia is expected to generate net revenue of about C$570 million for 2017, CCL said.

CCL's pro-forma annual sales are forecast to exceed C$5 billion post close, expected by the end of first quarter of 2017, the company said.

CCL is buying Innovia debt free and net of cash from a consortium of U.K.-based private equity investors managed by The Smithfield Group LLP.

The deal will be financed from existing revolving credit facility and a new $450 million, two-year term loan provided by a syndicate of banks led by Bank of Montreal, CCL said.

The Bank of England said last month that its supplier of currency, Innovia, is working toward removing the use of animal fat in the production of its new plastic five pound note after objection raised by thousands of vegetarians.

(Reporting by Aravind K in Bengaluru; Editing by Sriraj Kalluvila)