425: Berry Global and Glatfelter Achieve Key Regulatory Milestone in Proposed Merger

Berry Global and Glatfelter announce they have received all required regulatory approvals for the spin-off and merger of Berry's Health, Hygiene and Specialties Global Nonwovens and Films business with Glatfelter.

Summary

• Berry Global Group, Inc. and Glatfelter Corporation have reached an additional regulatory milestone in their proposed transaction.
• The transaction involves the combination of Berry's Health, Hygiene and Specialties segment, including its Global Nonwovens and Films business (HHNF), with Glatfelter.
• All required approvals and clearances under competition and foreign direct investment laws have been received.
• The initial announcement of the definitive agreement was on February 7, 2024.
• The transaction is structured as a Reverse Morris Trust transaction.
• The deal is expected to close in the second half of calendar 2024.
• The closing is subject to Glatfelter shareholder approval and customary closing conditions.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the achievement of a significant regulatory milestone, indicating progress towards the completion of the merger. The language is optimistic about the future of the combined company.

Positives

• The receipt of all required regulatory approvals significantly de-risks the transaction.
• The merger is expected to create a leading publicly-traded company in the specialty materials industry.
• The transaction is structured as a Reverse Morris Trust, which is generally tax-efficient.

Negatives

• The transaction is still subject to Glatfelter shareholder approval, which introduces some uncertainty.
• The deal is subject to customary closing conditions, which could potentially delay or prevent the closing.

Risks

• The occurrence of any event, change or other circumstances that could give rise to the termination of the proposed transaction.
• The risk that Glatfelter shareholders may not approve the transaction proposals.
• 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.
• Risks that any of the other closing conditions to the proposed transaction may not be satisfied in a timely manner.
• Risks that the anticipated tax treatment of the proposed transaction is not obtained.
• Risks related to potential litigation brought in connection with the proposed transaction.
• Uncertainties as to the timing of the consummation of the proposed transaction.
• Unexpected costs, charges or expenses resulting from the proposed transaction.
• Risks and costs related to the implementation of the separation of the business, operations and activities that constitute the global nonwovens and hygiene films business of Berry (the HHNF Business) into Treasure Holdco, Inc., a Delaware corporation and a wholly owned subsidiary of Berry (Spinco), including timing anticipated to complete the separation.
• Any changes to the configuration of the businesses included in the separation if implemented.
• The risk that the integration of the combined company is more difficult, time consuming or costly than expected.
• Risks related to 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.
• Risks related to disruption of management time from ongoing business operations due to the proposed transaction.
• Failure to realize the benefits expected from the proposed transaction.
• 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.

Future Outlook

The transaction is expected to close in the second half of calendar 2024, subject to Glatfelter shareholder approval and customary closing conditions. The combined company is expected to be a leading, publicly-traded company in the specialty materials industry.

Industry Context

The merger reflects a trend towards consolidation in the specialty materials industry, aiming to create larger, more competitive entities with broader product portfolios and geographic reach. This move allows both companies to focus on core competencies and potentially achieve greater operational efficiencies.

Comparison to Industry Standards

• Similar transactions in the specialty materials industry include the merger of equals between Hexcel and Woodward, which aimed to create a leader in advanced aerospace and industrial materials.
• Another example is the acquisition of Cytec Industries by Solvay, which expanded Solvay's portfolio in composite materials and specialty chemicals.
• These deals, like the Berry-Glatfelter merger, are driven by the desire to achieve scale, diversify product offerings, and enhance technological capabilities to better serve customers and compete globally.

Management Changes

Stakeholder Impact

• Shareholders of Glatfelter will have the opportunity to vote on the proposed transaction.
• Employees of both Berry's HHNF business and Glatfelter will be integrated into the new combined company.
• Customers of both companies can expect a broader range of products and services.
• The combined company may have increased negotiating power with suppliers.
• Creditors of both companies will be affected by the financial structure of the combined entity.

Next Steps

• Glatfelter shareholder vote to approve the transaction.
• Completion of remaining customary closing conditions.
• Finalization of the spin-off of Berry's HHNF business into Treasure Holdco, Inc. (Spinco).
• Integration of the combined company's operations.

Key Dates