Berry Global Group Inc., based in Evansville, Indiana, has agreed to spin off and merge most of its health, hygiene, and specialties segment—to include its global nonwovens and films business—with Glatfelter based in Charlotte, North Carolina.
The deal, which was approved unanimously by the boards of both companies, will create a new publicly traded company in the specialty materials industry, according to a news release that says the deal is expected to close in the second half of this year.
The new company, which will be renamed and rebranded by the transaction’s close, will be led by Curt Begle, Berry’s president of the health, hygiene, and specialties segment. A longtime member and former board chair for the Flexible Packaging Association, Begle will serve as CEO of the new company.
The board of directors will initially comprise nine members: Six designated by Berry and three by Glatfelter. The chairman will be designated by Glatfelter, and all directors will be named later.
Berry’s global nonwovens and films business brings an extensive portfolio of proprietary technologies, with a focus on healthcare, hygiene, and specialty end markets, while Glatfelter provides a broad range of innovation capabilities and sustainability solutions, according to the news release from Berry.
“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 CEO, in a statement. “We believe these two businesses, in combination, can drive significant value for shareholders with complementary portfolios, positioning each for greater success.”
The terms of the deal include the following:
- Ownership: Berry shareholders will own 90% of the combined company’s common shares. 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 the money to repay debt.
After the deal is completed, 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,” Kwilinski said in a statement.
In September, Berry announced a review of strategic alternatives for its health, hygiene, and specialties segment. Some of that segment, including Berry’s tapes business, will be retained by Berry. “Post-separation, Berry will continue to offer industry-leading products, solutions, and material science to help customers achieve their commercial and sustainability goals,” the company said in a news release.