EVANSVILLE - Berry Global and nonwovens manufacturer Glatfelter Corporation have signed an agreement that will see Berry spin-off and merge the majority of its Health, Hygiene and Specialties business, including its Global Nonwovens and Films (HHNF) arm, with Glatfelter.
Berry announced in November that it was exploring strategic alternatives for its health and hygiene business, which is a major supplier to a broad range of end markets including healthcare, hygiene, consumer, building and construction, and industrials.
Under the terms of the deal, Berry is expected to receive net cash proceeds of approximately US$1 billion once the transaction closes. Berry shareholders will own 90% of the combined company's common shares with Glatfelter shareholders owning the remaining 10% of the combined company.
With unanimous approval from the boards of directors of both companies, the combined company will offer a highly complementary range of nonwovens and films including both polymer-based and fibre-based products, with significant geographic diversification and a presence in all major markets.
The remaining health and hygiene businesses, including Berry’s tapes business, will be retained by Berry.
Announcing the deal, Kevin Kwilinski, Berry’s chief executive officer, said the merger was the culmination of a comprehensive review of strategic alternatives to determine the value-maximising path forward for Berry shareholders. “We believe these two businesses, in combination, can drive significant value for shareholders with complementary portfolios, positioning each for greater success," he said.
"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."
For Glatfelter, the proposed transaction represents the next significant milestone in the company’s strategy to grow as a global supplier of speciality materials. Thomas Fahnemann, Glatfelter's president and chief executive officer, commented: "The uniting of our organisations creates a premier nonwovens supplier and a global leader in speciality materials, with the talent, technologies, scale, and footprint to deliver commercial and operational excellence, and a wide range of solutions for our customers."
Together, HHNF and Glatfelter generated pro forma revenue of approximately $3.6 billion and adjusted EBITDA of approximately $455 million based on combined results for their respective last twelve months periods, along with expected cost synergies of $50 million and combined pro forma adjustments of $25 million to be realised by year three.
The new, publicly-traded company, which will be renamed and rebranded by the end of the transaction, 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.