Berry’s hygiene segment and Glatfelter plan merger into new company

Chicago, Feb. 7 – Berry Global Group, Inc. and Glatfelter Corp. announced a spin-off transaction and merger agreement on Wednesday, according to a press release and an 8-K filing with the Securities and Exchange Commission.

Berry will be conducting a tax-fee spinoff of a majority of its health, hygiene and specialties global nonwovens and films business.

Then, that business will merge with Glatfelter as a combined new company with a new name.

Berry will receive $1 billion as a cash distribution from the merger, funded with debt taken on by the new company.

The debt of the new company will also include Glatfelter’s existing $500 million of 4¾% senior notes due 2029, anticipated to remain outstanding. Other debt will be retired, though, according to an investor presentation.

With certain existing debt of Berry’s health and hygiene business, the new debt and Glatfelter’s existing debt, the new company is expected to have net leverage of approximately 4x.

Commitment

Citigroup Global Markets Inc., Wells Fargo Bank, NA and Wells Fargo Securities entered into a commitment letter on Tuesday to support the transaction.

Citi and Wells Fargo agreed to provide a $1.585 billion seven-year first-priority senior secured term loan and a $250 million five-year first-priority senior secured ABL revolver.

Proceeds from the new loans will be used on the closing date to repay certain debt of Glatfelter, certain obligations of Spinco owing to Berry subsidiaries and transaction fees and expenses.

Proceeds of the revolver will be used for general corporate purposes.

The new company expects to raise permanent debt financing by the time the transaction closes, in the second half of calendar 2024.

Details

The combined company is expected to have a value of $3.6 billion on an enterprise value basis with pro forma revenue of around $3.6 billion and adjusted EBITDA of approximately $455 million.

Berry shareholders will own 90% of the combined company and Glatfelter shareholders will own 10% of the combined company.

Other details

Berry plans to use the $1 billion in proceeds to repay existing debt.

The transaction is expected to be leverage-neutral for Berry. Glatfelter’s leverage profile will improve.

Berry’s current president of the health and hygiene unit will be the chief executive officer of the new company.

The new nine-member board will have six members designated by Berry and three designated by Glatfelter.

Berry Global is a packaging solutions manufacturer based in Evansville, Ind.

Glatfelter is a Charlotte, N.C.-based global supplier of engineered materials.

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