425: Berry Global and Glatfelter Address Employee Concerns in Anticipation of Magnera Merger

Berry Global and Glatfelter have released a comprehensive FAQ document addressing employee concerns regarding the upcoming merger and the formation of Magnera, covering topics from company culture and benefits to IT and sales strategies.

Summary

• Berry Global and Glatfelter have released a joint communication addressing frequently asked questions about the upcoming merger and the creation of the new entity, Magnera.
• The document covers a wide range of topics relevant to employees, including company culture, employment policies, benefits, compensation, IT systems, brand communication, company structure, and sales strategies.
• The new company's purpose is 'to better the world with new possibilities made real,' and its promise is 'the co-creation of innovative material solutions that propel our customers goals and solve end-users problems.'
• Magnera's beliefs are that 'passion is power, curiosity drives progress, and our success is interconnected.'
• Most employees will see limited changes in their roles and responsibilities, but some management positions may be affected.
• Employees will receive details on 2025 compensation programs and U.S. health and welfare benefit programs, with global HR programs to be reviewed in 2025.
• There are no anticipated changes to payroll providers or pay dates on Day 1.
• Charlotte, NC, will be the location of Magnera's corporate headquarters.
• The goal is to align the new organizational structure prior to closing to ensure a focus on Day 1 execution.
• Email addresses will transition to @magnera.com in a phased approach within the first 100 days post-close, with forwarding from old addresses continuing for 6-9 months.
• Branded items will be transitioned to Magnera within six months, and external signage within one year.
• The company will continue to invest in new products, machinery, equipment, and people development.
• A transition services agreement will cover Berry's HHNF Business sites running on Berry's ERP system for 24 months after close, with a transition off JD Edwards in the US and Canada planned before the agreement ends.
• The preferred ERP system is SAP S4.
• The new regional sales organizations will consist of fully integrated teams from both companies.
• Customers have been informed of the transition to the new brand, and communication will continue for 18-24 months.
• Glatfelter's 2024 Global Bonus Plan and Site Incentive Plan payouts are subject to special transaction-related treatment if closing occurs in 2024, provided the company's annualized EBITDA performance reaches the $90 million threshold.
• Glatfelter equity will be subject to a Reverse Stock Split, with the economic value of the equity preserved.
• A blackout period for equity administration is expected to last until the week of December 2, 2024.
• Berry's 401(k) account will automatically transfer to Magnera under the plan name Treasure 401(k) Plan, with a blackout period expected to last until the week of November 25, 2024.
• Plan design features such as vesting, employer match amounts, and funding timing, will remain the same through 2025.

Sentiment

Score: 7

Explanation: The document is largely informative and reassuring, focusing on a smooth transition and minimal disruption for employees and customers. The tone is positive and forward-looking, indicating a generally optimistic outlook for the merger.

Positives

• The new company, Magnera, will have a clear purpose, promise, and set of beliefs to guide its operations.
• Most employees are expected to experience limited changes in their roles and responsibilities.
• Employees will receive details on 2025 compensation programs and benefits in the near future.
• There are no anticipated changes to payroll providers or pay dates on Day 1.
• The company is committed to investing in new products, machinery, equipment, and people development.
• Customers have already been informed of the transition to the new brand.
• Glatfelter employees may receive a pro-rata target payout for their 2024 bonus plan if the closing occurs in 2024 and the EBITDA threshold is met.
• Berry employees will continue to have their compensation and benefits honored through December 31, 2025.

Negatives

• Some management positions may be affected by changes in roles and reporting structures.
• Employees will experience a blackout period during which they cannot access or make changes to their equity or 401(k) accounts.
• Certain investment options in the 401(k) plan will change.
• In 2025, the employer contribution to the 401(k) plan will be reduced from 7% to 3% for Glatfelter employees, although this is unrelated to the merger.
• Employees enrolled in Anthem benefits will transfer to United Healthcare and certain voluntary benefits will be discontinued.

Risks

• The integration of the combined company may be more difficult, time-consuming, or costly than expected.
• The company may fail to realize the expected benefits from the proposed transaction.
• The announcement, pendency, or completion of the proposed transaction may disrupt management time and affect the ability to retain customers and key personnel.
• There are risks related to potential litigation brought in connection with the proposed transaction.
• The company's ability to meet specific customer needs and requirements may be impacted during the transition period.

Future Outlook

The company aims for a seamless integration process and will continue to evaluate and execute on investment opportunities around the globe. Magnera's combined portfolio and expanded footprint will enable it to provide a broader range of solutions to meet customer needs.

Management Comments

• Our Purpose is to better the world with new possibilities made real.
• Our Promise is the co-creation of innovative material solutions that propel our customers goals and solve end-users problems.
• Our Beliefs are that passion is power, curiosity drives progress, and our success is interconnected.
• Innovation will be a part of every conversation.
• The goal of aligning the new organization structure prior to closing is to make sure our team is focused on Day 1 to continue effectively executing on our goals and objectives.

Industry Context

This merger reflects a trend in the specialty materials industry towards consolidation to achieve greater scale, broader product offerings, and enhanced customer solutions. Competitors in the space are likely evaluating similar strategies to remain competitive.

Comparison to Industry Standards

• The transition of IT systems to SAP S4 is in line with industry best practices for large enterprises seeking to streamline operations and improve data management.
• The commitment to maintaining investments in machinery, equipment, and people development aligns with the practices of leading companies in the specialty materials sector, such as DuPont and 3M, which prioritize innovation and operational excellence.
• The phased approach to brand integration and customer communication is similar to strategies employed by other companies undergoing mergers and acquisitions, such as Dow and Corteva, to minimize disruption and maintain customer relationships.

Stakeholder Impact

• Shareholders will be impacted by the reverse stock split and the potential for increased value through the combined company.
• Employees will experience changes in benefits, compensation, and potentially roles and responsibilities.
• Customers will benefit from the expanded product portfolio and capabilities of the combined company.
• Suppliers will need to adapt to the new company's procurement processes and requirements.

Next Steps

• Employees will receive further communications regarding 2025 compensation programs and benefits.
• Open enrollment for 2025 benefits will take place in October and November 2024.
• Email addresses will transition to @magnera.com in a phased approach.
• Brand guidelines and toolkits will be provided post-close.
• The new regional sales organizations will be completed and communicated.

Key Dates