Combination creates a large-scale global
franchise with an industry-leading solution set serving attractive,
growing specialty materials markets
Establishes leading positions in the high
value-added categories within the specialty materials industry,
served by differentiated innovation capabilities
Transaction values the combined company at $3.6
billion on an enterprise value basis, with pro forma revenue of
~$3.6 billion and Adj. EBITDA (1) of ~$455 million
Berry and Glatfelter shareholders to own 90%
and 10% of the combined company, respectively. Berry to receive an
approximate net $1 billion cash distribution at closing
Enhances earnings power with secular rebound
and expected cost synergies of at least $50 million by year
three
Tax-efficient Reverse Morris Trust transaction
allows for full shareholder participation in upside of combined
company
Accelerates strategic repositioning of Berry to
a pure-play provider of innovative, sustainable global packaging
solutions
Improves Glatfelter’s leverage profile to
increase shareholder value – transaction pro forma net leverage (2)
of 4x
Meaningfully accelerates Glatfelter’s strategy
to further optimize product portfolio and strengthen strategic
innovation and sustainability offerings
Significant step in the optimization of Berry’s
portfolio and the culmination of a comprehensive review to drive
value creation for Berry shareholders
Berry and Glatfelter to Host Joint Investor
Conference Call, Wednesday February 7, 2024 at 8:30 AM Eastern
Daylight Time
Berry Global Group, Inc. (NYSE:BERY) and Glatfelter Corporation
(NYSE:GLT) announced today they have entered into definitive
agreements for Berry to spin-off and merge the majority of its
Health, Hygiene and Specialties segment to include its Global
Nonwovens and Films business (“HHNF”) with Glatfelter, to create a
leading, publicly-traded company in the specialty materials
industry. The Boards of Directors of Berry and Glatfelter have
unanimously approved the transaction.
The new combined company (“NewCo”) will become a global leader
in the growing specialty materials industry, serving the world’s
largest brand owners across global end markets with favorable
long-term growth dynamics. HHNF brings an extensive portfolio of
proprietary technologies, with a strong focus on healthcare,
hygiene, and specialty end markets, while Glatfelter provides a
broad range of innovation capabilities and sustainability
solutions. Together, the combined company will offer a highly
complementary product suite, including both polymer-based and
fiber-based solutions, supported by strong innovation capabilities,
with significant geographic diversification and a presence in all
major markets.
“This announcement is the culmination of a comprehensive review
of strategic alternatives to determine the value-maximizing path
forward for Berry shareholders,” said Kevin Kwilinski, Berry’s
Chief Executive Officer. “We believe these two businesses, in
combination, can drive significant value for shareholders with
complementary portfolios, positioning each for greater success.
Following completion of the transaction, Berry will become a
pure-play provider of innovative, sustainable global packaging
solutions, which we believe will deliver even more predictable
earnings growth for Berry shareholders. Additionally, we believe
HHNF in combination with Glatfelter will thrive as an independent
company that is positioned to drive long-term growth with its
global brand-owner customers.”
"The uniting of our organizations creates a premier nonwovens
supplier and a global leader in specialty materials, with the
talent, technologies, scale, and footprint to deliver commercial
and operational excellence, and a wide range of solutions for our
customers. Our combined company is scaled to accelerate innovation
and leverage our intellectual property over a large worldwide
commercial platform and is well positioned to deliver substantial
shareholder value," said Thomas Fahnemann, Glatfelter's President
and Chief Executive Officer.
Berry to Enhance its Focus on Consumer Packaging
Leadership
In September, Berry announced a review of strategic alternatives
for its Health, Hygiene & Specialties (‘HH&S’) segment.
Today's announcement is the culmination of a comprehensive review
of strategic alternatives to determine the value-maximizing path
forward for Berry shareholders. The remaining HH&S businesses,
including Berry’s tapes business, will be retained by Berry.
The proposed transaction marks an important milestone in Berry’s
transition to becoming a streamlined and focused provider of
consumer packaging. Post-separation, Berry will continue to offer
industry-leading products, solutions, and material science to help
customers achieve their commercial and sustainability goals. Pro
forma for the separation transaction, Berry generated approximately
$10.2 billion of revenue and $1.8 billion in Adjusted EBITDA for
the last twelve months period end December 30, 2023. Furthermore,
in conjunction with today’s announcement, Berry will change the
name of its Engineered Materials segment to Flexibles to showcase
the continued evolution of this segment towards high-value products
and solutions.
Glatfelter to Deliver Significant Shareholder Value and
Platform for Future Growth
For Glatfelter, the proposed transaction represents the next
significant milestone in the Company’s time-tested strategy as a
leading global supplier of specialty materials. The combination of
Berry’s HHNF business and Glatfelter provides meaningful scale
given the complementary technology and product portfolios, along
with a platform for considerable growth in future periods. The
transaction provides NewCo the opportunity to deliver significant
value creation for Glatfelter shareholders by immediately
deleveraging Glatfelter’s balance sheet and increasing the equity
value of the overall enterprise, while also enhancing its credit
profile with customers and suppliers. Glatfelter’s recent focus on
optimizing its portfolio, managing the price/cost spread dynamic,
and driving commercial and operational excellence, along with
G&A cost discipline, provides the foundation to meaningfully
contribute towards the overall success of NewCo.
Financial Highlights
Together, HHNF and Glatfelter generated pro forma revenue of
approximately $3.6 billion and Adjusted EBITDA (1) of approximately
$455 million based on combined results for the last twelve months
(‘LTM’) period ended December 2023 for Berry and the LTM period
ended September 2023 for Glatfelter, along with expected cost
synergies of $50 million and combined pro forma adjustments of $25
million to be realized by year three.
(1)
Adjusted/Operating EBITDA are non-GAAP measures that refer to
earnings before interest, taxes, depreciation, and amortization,
pro forma, and as further described as Operating EBITDA for the LTM
period ended December 2023 for Berry and Adjusted EBITDA for the
LTM period ended September 2023 for Glatfelter, along with expected
cost synergies of $50 million and combined pro forma adjustments to
be realized by year three. A reconciliation to the nearest GAAP can
be found in GLT’s September 10-Q for adjusted earnings and Berry
numbers are a carveout of HH&S and unaudited.
(2)
Pro forma net leverage is a non-GAAP measure and refers to
NewCo.’s net debt divided by adjusted EBITDA
Governance and Management
The new, publicly-traded company, which will be renamed and
rebranded by transaction close, will be led by Curt Begle, Berry’s
current President of HH&S, who will serve as CEO. Additional
members of the combined company's senior management team will be
announced at a later date.
“I am humbled and honored to be trusted as the leader of this
new global enterprise and its 8,700 skilled and dedicated team
members. This combination positions us to delight our customers,
enhance the lives of our employees, and create value for our
shareholders. Today’s announcement is the first step in creating a
pure-play leader in nonwovens and specialty materials
well-positioned in growing, global markets. We will increase the
combined company’s relevance as a supplier of choice, through
product innovation, superior service, and reliability. Our
combined, well-invested platforms will provide value-added product
offerings with leading sustainability-driven solutions for
brand-owner customers globally,” stated Curt Begle, President of
Berry’s Health, Hygiene & Specialties division.
The Board of Directors of the combined company will initially be
comprised of nine total members, consisting of six designated by
Berry and three designated by Glatfelter. The chairman will be
designated by Glatfelter, and all directors will be named at a
future date.
Strategic Rationale of the Combination
- Creates a leading global competitor in the large and growing
specialty materials industry
- Broadens substrate, product and end market mix, combining
highly complementary portfolios
- Provides for significant geographic diversification with a
presence in all major markets
- Scales resources to drive innovation and leverage R&D
across a large, global franchise
- Combines extensive operational expertise, coupled with deep
industry knowledge and technical know-how
- Enables significant synergy potential; expected cost synergies
$50 million composed of a combination of procurement, G&A and
other operational improvement opportunities expected by the third
year following closing
Transaction Details
The transaction is being structured as a Reverse Morris Trust
transaction and is intended to be tax-free to Berry, Glatfelter and
their respective shareholders for U.S. federal income tax purposes.
Key details of the transaction include:
- Ownership: Berry shareholders will own 90% of the
combined company's common shares upon consummation of the
transaction. Glatfelter shareholders will own the remaining 10% of
the combined company.
- Cash Proceeds: Berry is expected to receive net cash
proceeds of approximately $1 billion at close and intends to use
these proceeds to repay existing debt. Berry expects to maintain
its existing capital allocation priorities following this
transaction.
- Financing: NewCo. has obtained committed financing from
Citigroup and Wells Fargo Bank, N.A. and expects to raise permanent
debt financing by transaction close, resulting in net leverage of
approximately 4.0x, inclusive of Glatfelter’s $500 million 4.75%
Senior Notes due 2029, which are anticipated to remain
outstanding.
- Closing: Closing of the transaction is expected to occur
in the second half of calendar 2024, subject to various customary
closing conditions, including regulatory approvals and Glatfelter
shareholder approval. No vote of Berry’s shareholders is required
for the transaction. Employee representation will be involved where
applicable.
- Pro Forma Impact to Berry: The transaction is expected
to be leverage neutral to Berry.
Additionally, prior to closing of the transaction, Glatfelter
will complete a reverse stock split of all of its issued and
outstanding common stock. The reverse stock split ratio will be
determined by Glatfelter and Berry, closer to the closing date of
the transaction, and additional information will be provided prior
to the effective time of the reverse stock split.
Conference Call Details
Berry and Glatfelter management will together discuss the
transaction on a joint conference call/webcast scheduled for today
at 8:30 a.m. ET. This call is expected to last approximately 30
minutes. A copy of this release along with the investor
presentation can be found on Glatfelter’s investor website at
www.glatfelter.com.
This will be followed by a separate conference call to discuss
Berry’s fiscal first quarter 2024 financial results at 10:00 a.m.
ET today. Both calls will be webcast live at the Company’s website
at https://ir.berryglobal.com/financials. A new, simplified event
registration and access provides two ways to access the call. A
replay of the webcast will be available via the same link on our
website approximately two hours after the completion of the
call.
By Telephone Participants may register for the
transaction announcement call here now or any time up to and during
the time of the call, and will immediately receive the dial-in
number and a unique pin to access the call. While you may register
at any time up to and during the time of the call, you are
encouraged to join the call 10 minutes prior to the start of the
event.
Via the Internet The transaction-related conference call
and accompanying webcast slides will also be broadcast live over
the internet. To access the event, click on the following link:
https://ir.berryglobal.com/financials. A replay of the webcast will
be available via the same link on our website approximately two
hours after the completion of the call.
Advisors
Citigroup Global Markets Inc. and Wells Fargo are serving as
financial advisors to Berry, and Bryan Cave Leighton Paisner LLP is
serving as legal advisor to Berry. J.P. Morgan Securities LLC is
serving as financial advisor to Glatfelter, and King & Spalding
LLP is serving as legal advisor.
Cautionary Statement Concerning Forward-Looking
Statements
Statements in this release that are not historical, including
statements relating the expected timing, completion and effects of
the proposed transaction between Berry and Glatfelter, are
considered “forward looking” within the meaning of the federal
securities laws and are presented pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
You can identify forward-looking statements because they contain
words such as “believes,” “expects,” “may,” “will,” “should,”
“would,” “could,” “seeks,” “approximately,” “intends,” “plans,”
“estimates,” “projects,” “outlook,” “anticipates” or “looking
forward,” or similar expressions that relate to strategy, plans,
intentions, or expectations. All statements relating to estimates
and statements about the expected timing and structure of the
proposed transaction, the ability of the parties to complete the
proposed transaction, benefits of the transaction, including future
financial and operating results, the combined company’s plans,
objectives, expectations and intentions, and other statements that
are not historical facts are forward-looking statements. In
addition, senior management of Berry and Glatfelter, from time to
time make forward-looking public statements concerning expected
future operations and performance and other developments.
Actual results may differ materially from those that are
expected due to a variety of factors, including without limitation:
the occurrence of any event, change or other circumstances that
could give rise to the termination of the proposed transaction; the
risk that Glatfelter shareholders may not approve the transaction
proposals; the risk that the necessary regulatory approvals may not
be obtained or may be obtained subject to conditions that are not
anticipated; risks that any of the other closing conditions to the
proposed transaction may not be satisfied in a timely manner; risks
that the anticipated tax treatment of the proposed transaction is
not obtained; risks related to potential litigation brought in
connection with the proposed transaction; uncertainties as to the
timing of the consummation of the proposed transaction; unexpected
costs, charges or expenses resulting from the proposed transaction;
risks and costs related to the implementation of the separation of
Berry’s HH&S global nonwovens and films business into a new
entity (“Spinco”), including timing anticipated to complete the
separation; any changes to the configuration of the businesses
included in the separation if implemented; the risk that the
integration of the combined companies is more difficult, time
consuming or costly than expected; risks related to financial
community and rating agency perceptions of each of Berry and
Glatfelter and its business, operations, financial condition and
the industry in which they operate; risks related to disruption of
management time from ongoing business operations due to the
proposed transaction; failure to realize the benefits expected from
the proposed transaction; effects of the announcement, pendency or
completion of the proposed transaction on the ability of the
parties to retain customers and retain and hire key personnel and
maintain relationships with their counterparties, and on their
operating results and businesses generally; and other risk factors
detailed from time to time in Glatfelter’s and Berry’s reports
filed with the SEC, including annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and
other documents filed with the SEC. These risks, as well as other
risks associated with the proposed transaction, will be more fully
discussed in the registration statements, proxy
statement/prospectus and other documents that will be filed with
the SEC in connection with the proposed transaction. The foregoing
list of important factors may not contain all of the material
factors that are important to you. New factors may emerge from time
to time, and it is not possible to either predict new factors or
assess the potential effect of any such new factors. Accordingly,
readers should not place undue reliance on those statements. All
forward-looking statements are based upon information available as
of the date hereof. All forward-looking statements are made only as
of the date hereof and neither Berry nor Glatfelter undertake any
obligation to update or revise any forward-looking statement as a
result of new information, future events or otherwise, except as
otherwise required by law.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed transaction between Berry and Glatfelter.
In connection with the proposed transaction, Berry and Glatfelter
intend to file relevant materials with the SEC, including a
registration statement on Form S-4 by Glatfelter that will contain
a proxy statement/prospectus relating to the proposed transaction.
In addition, Spinco expects to file a registration statement in
connection with its separation from Berry. This communication is
not a substitute for the registration statements, proxy
statement/prospectus or any other document which Berry and/or
Glatfelter may file with the SEC. STOCKHOLDERS OF BERRY AND
GLATFELTER ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE
SEC, INCLUDING THE REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain copies of the registration
statements and proxy statement/prospectus (when available) as well
as other filings containing information about Berry and Glatfelter,
as well as the Spinco, without charge, at the SEC’s website,
http://www.sec.gov. Copies of documents filed with the SEC by Berry
or the Spinco will be made available free of charge on Berry’s
investor relations website at https://ir.berryglobal.com. Copies of
documents filed with the SEC by Glatfelter will be made available
free of charge on Glatfelter's investor relations website at
https://www.glatfelter.com/investors.
No Offer or Solicitation
This communication is for informational purposes only and is not
intended to and does not constitute an offer to sell, or the
solicitation of an offer to sell, subscribe for or buy, or a
solicitation of any vote or approval in any jurisdiction, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in which such offer, sale or solicitation would be
unlawful, prior to registration or qualification under the
securities laws of any such jurisdiction. No offer or sale of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Participants in Solicitation
Berry and its directors and executive officers, and Glatfelter
and its directors and executive officers, may be deemed to be
participants in the solicitation of proxies from the holders of
Glatfelter capital stock and/or the offering of securities in
respect of the proposed transaction. Information about the
directors and executive officers of Berry, including a description
of their direct or indirect interests, by security holdings or
otherwise, is set forth under the caption “Security Ownership of
Beneficial Owners and Management” in the definitive proxy statement
for Berry’s 2024 Annual Meeting of Stockholders, which was filed
with the SEC on January 4, 2024
(https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001378992/000110465924001073/tm2325571d6_def14a.htm).
Information about the directors and executive officers of
Glatfelter including a description of their direct or indirect
interests, by security holdings or otherwise, is set forth under
the caption “Ownership of Company Stock” in the proxy statement for
Glatfelter's 2023 Annual Meeting of Shareholders, which was filed
with the SEC on March 31, 2023
(https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0000041719/000004171923000012/glt-20230331.htm).
In addition, Curt Begle, the current President of the Berry’s
Health, Hygiene & Specialties Division, will be appointed as
Chief Executive Officer of the combined company. Investors may
obtain additional information regarding the interest of such
participants by reading the proxy statement/prospectus regarding
the proposed transaction when it becomes available.
About Berry
At Berry Global Group, Inc. (NYSE: BERY), we create innovative
packaging solutions that we believe make life better for people and
the planet. We do this every day by leveraging our unmatched global
capabilities, sustainability leadership, and deep innovation
expertise to serve customers of all sizes around the world.
Harnessing the strength in our diversity and industry-leading
talent of over 40,000 global employees across more than 250
locations, we partner with customers to develop, design, and
manufacture innovative products with an eye toward the circular
economy. The challenges we solve and the innovations we pioneer
benefit our customers at every stage of their journey. For more
information, visit our website, or connect with us on LinkedIn or
Twitter. (BERY-F)
About Glatfelter
Glatfelter is a leading global supplier of engineered materials
with a strong focus on innovation and sustainability. The Company’s
high-quality, technology-driven, innovative, and customizable
nonwovens solutions can be found in products that are Enhancing
Everyday Life®. These include personal care and hygiene products,
food and beverage filtration, critical cleaning products, medical
and personal protection, packaging products, as well as home
improvement and industrial applications. Headquartered in
Charlotte, NC, the Company’s 2022 revenue was $1.5 billion with
approximately 2,980 employees worldwide. Glatfelter’s operations
utilize a variety of manufacturing technologies including airlaid,
wetlaid and spunlace with fifteen manufacturing sites located in
the United States, Canada, Germany, France, Spain, the United
Kingdom, and the Philippines. The Company has sales offices in all
major geographies serving customers under the Glatfelter and
Sontara® brands. Additional information about the Company may be
found on our website at www.glatfelter.com or connect with us on
LinkedIn.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206043927/en/
Berry Global, Inc.
Investor Contact Dustin Stilwell VP, Investor Relations
+1 812.306.2964 ir@berryglobal.com
Global Media Contact Laci Scourfield +1 812.250.3884
mediarelations@berryglobal.com
Glatfelter Corporation
Investor Contact Ramesh Shettigar +1 717.225.2746
Ramesh.Shettigar@glatfelter.com
Media Contact Eileen L. Beck +1 717.225.2793
Eileen.Beck@glatfelter.com
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