Dive Brief:
- Novolex has entered an agreement to acquire Pactiv Evergreen in an all-cash deal valued at $6.7 billion.
- Upon the deal’s completion, Pactiv Evergreen will transition from a public to a private company and its stock will be delisted from the Nasdaq. Shareholders will receive $18 per share.
- The acquisition is expected to close in mid-2025, pending standard regulatory reviews. Pactiv Evergreen’s board of directors and majority shareholder have approved the deal, so no further shareholder vote is required for the transaction to proceed.
Dive Insight:
The companies said in a joint news release on Monday that the deal “brings together two highly complementary businesses that will offer a broad product platform, establishing one of the most diverse substrate offerings in the packaging industry.”
The expanded footprint will span the United States, Canada and Mexico and include more than 250 brands. Both companies produce a variety of fiber and plastic packaging solutions, largely for food and beverages.
Novolex CEO Stan Bikulege will continue to lead the company following the transaction’s close. The companies did not immediately disclose whether Pactiv Evergreen CEO Mike King would take on a different position or exit. A securities filing notes that King is among the existing Pactiv executives whose compensation payment will be accelerated; CFO Jonathan Baksht also is on that list.
In Monday’s news release, King said that Pactiv Evergreen has “made significant progress on our transformation, focusing on our core strengths while driving operational excellence and enhancing profitability” over the last three years. He also said the company’s board and leadership team evaluated a range of opportunities prior to agreeing to the Novolex deal.
“This transaction reflects the continuation of our long-term growth strategy to create the industry’s most innovative, sustainable and customer-focused company,” Bikulege said in the release.
Pactiv Evergreen just completed the sale of two mills — one in Pine Bluff, Arkansas, and one in Waynesville, North Carolina — in October. During the company’s third-quarter earnings call on Nov. 12, King said the sale “marks an important milestone,” partly because the company no longer would operate paper mills and instead would focus on core North American converting operations.
During Pactiv Evergreen’s prior earnings call in August, executives cited cost-conscious consumers, weak demand and unexpected downtime at the Pine Bluff mill as leading reasons for the company’s weak performance. At that time, King described $15 million in cost-cutting actions for the remainder of 2024, including plans to curtail spending and reduce staffing. That followed a footprint optimization plan announced in February, which would affect about 10% of the company’s 100-facility footprint.
Pactiv Evergreen was created in 2020 through the combination of Evergreen Packaging and Pactiv, both of which were previously acquired by Reynolds Group Holdings. It then became a publicly traded company.
Novolex also acquired the assets of paper bag handle manufacturer American Twisting in September for an undisclosed amount.
In 2022, Apollo Funds acquired a majority stake in Novolex from Carlyle, which retained a minority stake. Affiliates of Apollo and the Canada Pension Plan Investment Board will contribute approximately $1 billion to support the Pactiv Evergreen purchase and will become a significant minority shareholder in the company after the transaction closes.
