Mativ Holdings, Inc. will divest its Engineered Papers business, part of the Fiber Based Solutions reporting segment, for $620 million, to Evergreen Hill Enterprise, a privately-held Singapore-based group of diverse companies.
Subject to customary closing date adjustments, Mativ expects to receive net proceeds (net of taxes and other items) of approximately $575 million in the proposed transaction, which would be primarily used for debt paydown.
Julie Schertell, CEO of Mativ, comments, “The proposed sale of Engineered Papers is a key milestone in the transformation of Mativ and aligns with our strategy to focus our efforts, accelerate growth, and drive value for our shareholders. This pivotal action positions our portfolio for faster growth and focuses our resources on categories with the most promising revenue and margin expansion opportunities. While a solid business, EP’s concentration in the tobacco industry is not aligned with Mativ’s long-term ambition and presents a more attractive value proposition under new strategic ownership. Our talented and dedicated employees will continue to deliver outstanding products and service to EP’s long-standing customer base, and we are confident in a smooth transition.”
In addition to paying down debt from the sale proceeds, Mativ isalso right-sizing our dividend to align with a reshaped portfolio, support continued near-term de-leveraging, and position the company for future growth investments. In addition, the board has approved a $30 million share repurchase program, providing added flexibility in our cash returns to shareholders.”
“Since our July 2022 merger, the management team and board of directors have been committed to making deliberate and carefully considered decisions to unlock the long-term value we see in Mativ as a leading specialty materials provider,” Schertell adds. “The scope of these decisions and actions include strategic portfolio optimization, capital allocation, organic investments, restructuring, and many other critical factors in realizing the enterprise’s full potential. Ultimately, we see the sale of EP and a more balanced capital allocation strategy that accelerates de-leveraging as the strongest path forward to amplify our long-term profit outlook and drive maximum value creation for our shareholders.”
The proposed transaction will also be subject to customary closing conditions, including regulatory approvals and satisfaction of the consultation process with the applicable works councils in France, and is expected to close in the fourth quarter of 2023 The potential buyer is expected to fund the proposed transaction with existing cash balance and is not dependent on capital markets for financing