Pactiv Evergreen Acquisition by Novolex

In a significant move within the packaging industry, Pactiv Evergreen Inc. (NASDAQ:PTVE) shares jumped 19.5% in premarket trading following the announcement that Novolex, an Apollo Global Management-owned company, will acquire the packaging products maker in a deal valued at $6.7 billion. The transaction was announced on Monday.

The acquisition price of $18.00 per share represents a substantial 32.4% premium over Pactiv's closing price on December 2, 2022, the last trading day before reports emerged that Novolex was exploring a purchase of the company.

The definitive agreement between Novolex and Pactiv Evergreen will unite two complementary businesses, creating a significant presence in the food, beverage, and specialty packaging sector. This merger is set to establish one of the most diverse substrate offerings in the industry, with a broad product platform that includes more than 250 brands and 39,000 SKUs. The combined entity will have a considerable manufacturing footprint and a large distribution network, enhancing its ability to serve a wide range of customers.

Stan Bikulege, Chairman and CEO of Novolex, expressed enthusiasm for the merger, stating that it aligns with the company's growth strategy and commitment to innovation, sustainability, and customer focus. He highlighted the complementary nature of Pactiv Evergreen's product portfolio and the shared values of both companies.

Michael King, President and CEO of Pactiv Evergreen, also remarked on the agreement, emphasizing the transaction's potential to maximize shareholder value and the progress Pactiv Evergreen has made in its transformation over the past three years.

The transaction is supported by funds managed by affiliates of Apollo and the Canada Pension Plan Investment Board (CPP Investments), which will invest approximately $1 billion and become a significant minority shareholder in the merged company.

The deal, which includes Pactiv Evergreen's net debt as of September 30, 2024, offers a 49% premium to the two-month unaffected volume-weighted average trading price as of December 2, 2024. Following the completion of the transaction, Pactiv Evergreen will become a privately held company, and its common stock will be delisted from Nasdaq. The combined company will continue under the leadership of Novolex's Stan Bikulege.

The Pactiv Evergreen Board of Directors has approved the transaction, which is now subject to regulatory approvals and other customary closing conditions. The deal has also received approval from Packaging (NYSE:PKG) Finance Limited, the majority shareholder of Pactiv Evergreen, and does not require additional shareholder approval. The transaction is expected to close in mid-2025 and is not contingent on financing.

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