CCL Industries to acquire Innovia for $1.13-billion

2016-12-19 16:38 ET - News Release -- Mr. Geoffrey Martin reports

 

CCL Industries Inc. has entered into a definitive agreement to acquire the Innovia group of companies for approximately $1.13-billion, debt-free and net of cash, from a consortium of private-equity investors based in the United Kingdom and managed by the Smithfield Group LLP. The transaction is subject to regulatory and change-of-control approvals, as well as customary completion procedures, with closing expected by the end of first quarter 2017.

 

Geoffrey T. Martin, president and chief executive officer of CCL, said: "This transaction is another transformative acquisition for CCL, propelling the company to world leadership in the disruptive, fast-growing polymer-banknote market, while strengthening our depth in the materials-science arena with proprietary BOPP films technology for the label, packaging and security sectors. We expect to find significant operational, customer and product innovation growth opportunities between Innovia and our end-use-facing businesses at CCL Label, CCL Design, Checkpoint and Avery. We are very pleased to welcome Innovia's deeply experienced industry people to our company and look forward to an exciting future together."

Mr. Martin concluded: "CCL's 2017 pro forma annual sales are forecast to exceed $5.0-billion postclose. The transaction will be financed from existing capacity in our revolving credit facility and a new $450-million (U.S.), two-year term loan provided by a syndicate of banks led by Bank of Montreal. At closing our expected pro forma net-debt-to-EBITDA-leverage ratio is estimated at a conservative 2.5 times, with additional balance sheet liquidity of approximately $700-million."

 

Highly strategic opportunity:

Leading, specialty, global producer of co-extruded, bi-axially oriented polypropylene (BOPP) films for labels, packaging and security applications;

Unique capability for polymer banknotes significantly expands CCL's security products, customers, markets and technologies;

Proprietary technology and strong intellectual property portfolio based on scale in research and development drives margin profile;

Enterprise value of $1.13-billion (1);

Two thousand seventeen sales forecast at $570-million with estimated earnings before interest, taxes, depreciation and amortization of $155-million;

Integration expense estimated at approximately $5-million;

Meaningful earnings accretion.

Innovia, headquartered in Wigton in the U.K., is a leading global producer of specialty, high performance, multilayer, surface-engineered BOPP films for label, packaging and security applications. The business has film extrusion, coating and metallizing facilities across the U.K., Belgium and Australia, as well as high-security, specialized polymer banknote operations in the U.K., Australia and Mexico, with 1,200 employees and sales offices in 16 countries around the world. For 2017, Innovia is expected to generate net revenue of approximately $570-million and estimated EBITDA of $155-million.

 

The Smithfield Group buys, operationally improves and expands businesses, headquartered in Europe and North America.

 

Conference call to discuss transaction

 

The press release and conference call presentation will be posted on the company's website on Dec. 19, 2016.

 

Mr. Martin, president and chief executive officer of CCL, and Sean Washchuk, senior vice-president and chief financial officer of CCL, will discuss the transaction during a conference call on Dec. 19, 2016, at 5:30 p.m. EST.

 

To access this call, please dial:

 

Local:  416-340-2216

 

Toll-free:  1-866-223-7781

 

Audio replay service for the conference call will be available Dec. 19, 2016, at 7:30 p.m. EST, until Jan. 19, 2017, at 11:59 p.m. EST.

 

To access the conference replay, please dial:

 

Local:  905-694-9451

 

Toll-free:  1-800-408-3053

 

Access code:  6898751

 

Business description

 

CCL Industries employs more than 20,000 people operating 156 production facilities in 35 countries on six continents with corporate offices in Toronto, Canada, and Framingham, Mass. CCL Label is the world's largest converter of pressure-sensitive and extruded film materials for a wide range of decorative, instructional and functional applications for large global customers in the consumer packaging, health care and chemicals, consumer durable, electronic device, and automotive markets. Extruded and laminated plastic tubes, folded instructional leaflets, precision decorated and die-cut components, electronic displays, and other complementary products and services are sold in parallel to specific end use markets.

 

(1) The exchange rate used was $1.40 per euro.