425: Berry Global and Glatfelter Announce Key Dates for Spin-Off and Merger, Creating Magnera Corporation

Berry Global and Glatfelter announce the record date and expected completion date for the spin-off and merger of Berry's Health, Hygiene and Specialties Global Nonwovens and Films business with Glatfelter, resulting in the formation of Magnera Corporation.

Summary

• Berry Global Group, Inc. and Glatfelter Corporation have announced key dates for the spin-off and merger of Berry's Health, Hygiene and Specialties Global Nonwovens and Films business (HHNF Business) with Glatfelter.
• The record date for the spin-off is set for the close of business on November 1, 2024.
• The spin-off and merger are expected to be completed on November 4, 2024, pending satisfaction or waiver of closing conditions.
• Glatfelter will effect a reverse stock split and change its name to Magnera Corporation (Magnera) in connection with the merger.
• Berry stockholders are expected to own approximately 90% of the outstanding shares of Magnera common stock on a fully-diluted basis upon completion of the merger.
• Current Glatfelter shareholders are expected to own approximately 10% of the outstanding shares of Magnera common stock on a fully-diluted basis.
• The number of Magnera shares Berry stockholders will receive depends on the number of Glatfelter shares outstanding, the number of Spinco shares outstanding, and the reverse stock split ratio determined by Glatfelter's board.
• No action is required by Berry stockholders to receive their shares of Magnera common stock in the merger.
• The New York Stock Exchange has advised that Berry common stock will trade with due-bills from November 1, 2024, through November 4, 2024.
• Berry common stock is expected to be quoted Ex-Distribution on November 5, 2024.
• Glatfelter's 2023 revenue was $1.4 billion with approximately 2,980 employees worldwide.

Sentiment

Score: 7

Explanation: The announcement is generally positive, providing clarity on the transaction timeline and ownership structure. However, the dilution for existing Glatfelter shareholders and the risks associated with the transaction temper the overall sentiment.

Positives

• The announcement provides clarity on the timeline for the spin-off and merger, reducing uncertainty for investors.
• The transaction is expected to create a new, larger entity (Magnera) with a strong market position.
• Berry stockholders will retain a significant ownership stake (90%) in Magnera.
• The merger is expected to unlock synergies and create value for both Berry and Glatfelter shareholders.

Negatives

• Current Glatfelter shareholders will experience significant dilution, owning only 10% of the combined company.
• The reverse stock split could negatively impact Glatfelter shareholders if not managed effectively.
• The transaction is subject to closing conditions, including Glatfelter shareholder approval, which introduces some risk.

Risks

• The transaction is subject to the risk that Glatfelter shareholders may not approve the transaction proposals.
• The transaction is subject to the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated or may be delayed.
• The transaction is subject to the risk that any of the other closing conditions to the proposed transaction may not be satisfied in a timely manner.
• The transaction is subject to the risk that the anticipated tax treatment of the proposed transaction is not obtained.
• There are risks related to potential litigation brought in connection with the proposed transaction.
• There are uncertainties as to the timing of the consummation of the proposed transactions.
• Unexpected costs, charges or expenses could result from the proposed transactions.
• There are risks and costs related to the implementation of the separation of HHNF Business into Spinco, including timing anticipated to complete the separation.
• Changes to the configuration of the businesses included in the separation if implemented could pose a risk.
• The integration of the combined company could be more difficult, time consuming or costly than expected.
• Financial community and rating agency perceptions of each of Berry and Glatfelter and its business, operations, financial condition and the industry in which they operate could pose a risk.
• The disruption of management time from ongoing business operations due to the proposed transaction could pose a risk.
• Failure to realize the benefits expected from the proposed transaction could pose a risk.
• The effects of the announcement, pendency or completion of the proposed transaction on the ability of the parties to retain customers and retain and hire key personnel and maintain relationships with their counterparties, and on their operating results and businesses generally could pose a risk.

Future Outlook

The spin-off and merger are expected to be completed on November 4, 2024, subject to the satisfaction or waiver of the closing conditions for the transaction. Upon completion of the merger, Berry stockholders are expected to collectively own approximately 90% of the outstanding shares of Magnera common stock on a fully-diluted basis, and current Glatfelter shareholders are expected to collectively own approximately 10% of the outstanding shares of Magnera common stock on a fully-diluted basis.

Industry Context

The merger reflects a trend towards consolidation in the nonwovens and specialty materials industry, as companies seek to achieve greater scale and efficiency. Companies like Ahlstrom-Munksjo and Suominen are also major players in this space, and this merger could create a more competitive landscape.

Comparison to Industry Standards

• Glatfelter's 2023 revenue of $1.4 billion is a significant figure in the engineered materials industry, but smaller than larger players such as Ahlstrom-Munksjo.
• The expected 90/10 ownership split post-merger is a common structure in similar transactions, where the larger company's shareholders retain the majority stake.
• Reverse stock splits are often used in mergers to achieve a desired share price or ownership structure, but can be viewed negatively by existing shareholders if not communicated effectively.

Stakeholder Impact

• Berry stockholders will receive shares in Magnera, representing a significant ownership stake.
• Glatfelter shareholders will see their ownership diluted to 10% of Magnera.
• Employees of both companies may experience changes as the businesses are integrated.
• Customers of both companies can expect a broader range of products and services from the combined entity.

Next Steps

• Glatfelter shareholders need to approve certain matters related to the transaction.
• The closing conditions need to be satisfied or waived.
• Berry stockholders will receive shares of Magnera common stock in the merger.
• Glatfelter will effect a reverse stock split and change its name to Magnera Corporation.

Key Dates