TIDMESNT
RNS Number : 0946Q
Essentra plc
24 June 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
FOR IMMEDIATE RELEASE
ESSENTRA PLC
A leading global provider of essential components and
solutions
SALE OF PACKAGING BUSINESS TO MAYR-MELNHOF
In line with the previously announced strategic review, Essentra
plc ("Essentra" or the "Company") today announces the disposal of
ESNT Packaging & Securing Solutions Limited and Essentra
Packaging US Inc and their respective subsidiary companies
("Packaging") to Mayr-Melnhof Group ("MM"), a leading producer of
carton board and folding cartons based in Austria, for a cash
consideration of GBP312(1) million, on a cash-free, debt-free basis
and subject to customary adjustments.
The transaction is subject to various conditions which are set
out further below including a shareholder vote for Essentra. The
Class 1 circular and notice of General Meeting will be published in
due course with the transaction set to complete in Q4 2022.
The Board intends to use the proceeds to further strengthen
Essentra's balance sheet, and make a small contribution to
Essentra's defined benefit pension schemes.
The strategic review of Essentra's Filters division is
progressing in line with expectations and, following the conclusion
of this review, the Board will determine the best use of cash on
the Company's balance sheet, carefully taking into consideration
the imperative of maximising shareholder value after allowing for
sufficient flexibility of the Components business to pursue value
creating opportunities.
Commenting on today's announcement, Paul Forman, Chief Executive
said:
"The sale of Packaging marks a significant step on our journey
to become a pure play Components business. A substantial amount of
work has gone into improving the Packaging division over the last
few years and I would like to thank all colleagues for their
commitment and hard work whilst part of Essentra. I wish them all
the best for the future. I am sure that the business will continue
to make excellent progress under the ownership of Mayr-Melnhof.
Essentra has a bright future as a global leading manufacturer
and distributor of components with a clear strategy and significant
opportunities to accelerate growth and expand market share. This
transaction will enhance Essentra's balance sheet strength and
enable the Group to participate in further investment
activity."
Details of the transaction
On 24 June 2022, Essentra International Limited and US NewCo,
LLC (the "Sellers"), MM Packaging GmbH (the "Purchaser") and
Mayr-Melnhof Karton AG entered a Sale and Purchase Agreement,
pursuant to which the Sellers agreed, on the terms and subject to
the conditions of the Sale and Purchase Agreement, to sell
Packaging to the Purchaser.
The consideration payable by the Purchaser at Completion is
GBP312m, subject to adjustments after Completion by way of a
standard completion accounts mechanics to allow for changes in
cash, debt and working capital.
Prior to completion of the transaction, Essentra will undertake
a group reorganisation to achieve the separation of Packaging from
the remainder of the Essentra group by transferring certain assets
that are currently part of Packaging to the retained Essentra group
and transferring certain other assets currently part of the
Essentra group to Packaging.
Under the terms of the Sale and Purchase Agreement, the
Purchaser has irrevocably granted to the UK Seller an option (the
"Put Option") to require the Purchaser to purchase the UK Shares
from the UK Seller. The Put Option may be exercised within five
business days following the date on which the information and
consultation process with the works council of Essentra Packaging
S.a.r.l. is deemed to have completed in accordance with the laws of
France.
The Sellers have given certain warranties and indemnities to the
Purchaser that are customary for a transaction of this nature and
size. These include, among other things, warranties that the
Sellers own the shares in the Target Companies free and clear from
any encumbrances and that each Seller has the requisite power and
authority to enter into and perform the Sale and Purchase Agreement
and other Transaction Documents. The Sellers' warranties also
include statements regarding the UK Shares and the US Shares;
financial statements; material contracts; insolvency; licences;
litigation and compliance with laws; intellectual property,
information technology and business information; property;
environmental matters; employment and incentives; pensions; and tax
affairs.
The transaction is conditional upon various conditions,
including the satisfaction (or waiver, where applicable) of the
following:
-- Approval of a resolution approving the transaction by
shareholders at a General Meeting of Essentra
-- Exercise of the Put Option
-- Completion of the reorganisation
-- Satisfaction of certain regulatory conditions
The Purchaser has agreed to take any and all steps to fulfil the
regulatory conditions at the earliest date.
The Board expects that, subject to the satisfaction and/or
waiver (where applicable) of the conditions precedent to the
transaction, completion will occur in Q4 2022.
The transaction excludes Essentra Packaging's business in India.
Whilst not material to the Group (less than 1% of revenue), the
Company will be reviewing options for this business moving
forward.
For the year ended 31 December 2021, Packaging excluding India
delivered adjusted operating profit of GBP15.8m pre-standalone cost
adjustments, and the gross assets(2) were GBP519.1m.
Class 1 transaction
The transaction constitutes a Class 1 transaction under the
Listing Rules. Completion is therefore conditional upon the
approval of Essentra's shareholders and a Circular will be sent to
the Company's shareholders in due course. Completion is also
subject to customary closing conditions, including anti-trust
clearance in certain jurisdictions.
Credit Suisse International is acting as sole sponsor and
exclusive financial advisor to Essentra plc in regard to the sale
of the Packaging business. Lazard & Co., Limited is acting as
independent financial adviser to the Board of Essentra.
Notes
1. GBP312m implies a multiple of 12.4x based on LTM May EBITDA
of GBP25.2m which includes standalone costs of GBP6.1m
2. The value of gross assets excludes intercompany receivables
and cash which will be settled as part of the transaction
Market Abuse Regulation statement
This announcement contains inside information.
Enquiries
Essentra plc Tulchan Communications LLP
Jack Clarke, Chief Financial Officer Olivia Peters
Claire Goodman, Group Investor Martin Robinson
Relations Manager Tel: +44 (0)20 7353 4200
Lucy Yank, Group Communications
Director
Tel: +44 (0)1908 359100
The person responsible for arranging the release of this
announcement on behalf of the Company is Jon Green, Company
Secretary of Essentra plc.
Cautionary forward-looking statement
This announcement contains forward-looking statements based on
current expectations and assumptions. Various known and unknown
risks, uncertainties and other factors may cause actual results to
differ from any future results or developments expressed or implied
by the forward-looking statement. Each forward-looking statement
speaks only as of the date of this announcement. The Company
accepts no obligation to revise or publicly update these
forward-looking statements or adjust them to future events or
developments, whether as a result of new information, future events
or otherwise, except to the extent legally required.
The release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and, therefore, any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. Any failure to
comply with these requirements or restrictions may constitute a
violation of the securities laws or regulations of any such
jurisdiction. This announcement has been prepared for the purposes
of complying with English law and the UK Listing Rules and the
information disclosed may not be the same as that which would have
been disclosed if this announcement had been prepared in accordance
with the laws and regulations of any jurisdiction outside of
England.
No offer or solicitation
This announcement does not constitute or form part of any offer
or invitation to purchase, otherwise acquire, subscribe for, sell,
otherwise dispose of or issue, or any solicitation of any offer to
sell, otherwise dispose of, issue, purchase, otherwise acquire or
subscribe for, any security.
No profit forecasts or estimates
No statement in this announcement is intended as a profit
forecast or estimate for any period.
Important information relating to financial advisers
Credit Suisse International ("Credit Suisse"), which is
authorised by the PRA and regulated by the FCA and the PRA in the
United Kingdom, is acting as financial adviser for Essentra plc and
no one else in connection with the transaction only and will not
regard any other person as its client in relation to the
transaction or any other matter referred to in this announcement
and will not be responsible to anyone other than Essentra plc for
providing the protections afforded to clients of Credit Suisse, nor
for providing advice to any other person in relation to the content
of this announcement or any other matter referenced herein.
Neither Credit Suisse nor any of its subsidiaries, branches or
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Credit Suisse in connection with this announcement, any
statement contained herein or otherwise
Lazard & Co., Limited ("Lazard"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively as financial adviser to the Board of Essentra
plc and no one else in connection with the transaction and will not
be responsible to anyone other than the Board of Essentra plc for
providing the protections afforded to clients of Lazard, nor for
providing advice to any other person in relation to the transaction
or any other matters referred to in this announcement. Neither
Lazard nor any of its affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Lazard in connection with this
announcement, any statement contained herein or otherwise.
Notes to Editors
About Essentra plc
Essentra plc is a FTSE 250 company and a leading global provider
of essential components and solutions. Organised into three global
divisions, Essentra focuses on the light manufacture and
distribution of high volume, enabling components which serve
customers in a wide variety of end-markets and geographies.
Headquartered in the United Kingdom, Essentra's global network
extends to 34 countries and includes 8,327 employees, 47 principal
manufacturing facilities, 28 sales & distribution operations
and two research & development centres. For further
information, please visit www.essentraplc.com.
Essentra Components
Essentra Components is a global market leading manufacturer and
distributor of plastic injection moulded, vinyl dip moulded and
metal items. Operating in 25 countries worldwide, 13 manufacturing
facilities and 23 sales & distribution centres serve more than
79,000 customers with a rapid supply of low cost but essential
products for a variety of applications in industries such as
equipment manufacturing, automotive, fabrication, electronics and
construction. The division also includes the Reid Supply business,
which provides a wide range of branded hardware supplies to a broad
base of industrial customers, largely located in the US
Mid-West.
Essentra Packaging
Essentra Packaging is one of only two multicontinental suppliers
of a full secondary packaging range to the health and personal care
sectors, with 23 facilities across three geographic regions. The
division's innovative products include cartons, leaflets,
self-adhesive labels and printed foils used in blister packs, which
help customers to meet the rapidly-changing requirements of these
end-markets and can also be combined with Essentra's authentication
solutions to help the fight against counterfeiting.
Essentra Filters
Essentra Filters is the only global independent cigarette filter
supplier. Currently headquartered in Singapore, the division has 12
sites across nine countries, including two innovation centres,
providing a flexible infrastructure strategically positioned to
serve the tobacco sector. The business supplies a wide range of
value-adding high-quality innovative filters, packaging solutions
to the roll your own segment and analytical laboratory services for
ingredient measurement to the industry: Essentra's offering also
includes Heat Not Burn and e-cigarette solutions to the rapidly
evolving market for Next Generation Products. The division also
includes the Tear Tapes business, which is globally recognised as
the leading manufacturer and supplier of pressure-sensitive tear
tapes, that are largely used in the tobacco, e-commerce, food and
beverage and specialist packaging sectors.
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END
DISPPUQGQUPPUAC
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