#Nonwovens / Technical Textiles
Berry Global and Glatfelter want to create a global specialty materials leader
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.
- 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
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.
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.
