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Multi-Color to buy labels unit of Constantia for $1.3 bln

July 17 (Reuters) - U.S.-based packaging group Multi-Color Corp said it would buy the labels unit of Constantia Flexibles GmbH <IPO-COFH.VI> for about $1.3 billion in cash and stock.

Constantia Flexibles will own about 16.6 percent of Multi-Color after the deal closes in the third fiscal quarter of 2018, the companies said on Monday.

Multi-Color said it would issue the stock at $75 per share. The company's shares were down 5.9 percent at $77.70 in light premarket trading.

Mike Henry, head of the Germany based Constantia Labels, is expected to become CEO-elect of Multi-Color, the companies said.

Reuters had reported on Friday about a possible deal for the unit, citing sources.

Buyout group Wendel, which owns 60 percent of Constantia Flexibles, as well as its co-investors are considering using proceeds from a sale of the labels group to fund add-on acquisitions for the remainder of the company, sources told Reuters.

Multi-Color said on Monday it expected the deal to meaningfully add to core earnings in its fiscal year ending March 2019. (Reporting by Supantha Mukherjee in Bengaluru; Editing by Sriraj Kalluvila)