RICHMOND, Va. - Tredegar Corporation (NYSE:TG), a global manufacturer of plastic films and aluminum extrusions, announced that it has received approval from Brazil's Administrative Council for Economic Defense (CADE) to proceed with the sale of its flexible packaging business, Terphane, to the Oben Group. The approval comes with specific post-closing commitments from Oben to alleviate certain competitive concerns. The transaction is scheduled to be finalized on November 1, 2024.
The agreement for the sale was originally entered into on September 1, 2023, with Tredegar set to receive a net cash-free and debt-free base consideration of $116 million. After accounting for projected Brazil withholding taxes, net working capital adjustments, escrow funds, US capital gains taxes, and transaction expenses, Tredegar anticipates a net cash-free and debt-free cash proceeds of $85 million. This includes $78 million at the time of closing and an additional $7 million expected from the release of certain escrow funds within 120 days after the closing.
Tredegar, which reported sales of $705 million in 2023, operates in various sectors, including aluminum extrusions for the North American building, automotive, and specialty markets, as well as surface protection films for the global electronics industry. Additionally, the company produces specialized polyester films, primarily serving the Latin American flexible packaging market. With approximately 1,900 employees, Tredegar has manufacturing facilities across North America, South America, and Asia.
Oben Group is a significant contributor to the flexible packaging industry, with over 32 years of experience and a presence in more than 17 countries. The company's product portfolio includes a range of state-of-the-art flexible films and serves clients in over 40 countries across the Americas, Europe, and Africa.
The press release includes forward-looking statements, which are based on Tredegar's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. The company cautions against placing undue reliance on these statements and refers readers to its SEC filings for a detailed discussion of potential risks.
The information regarding the sale and CADE's approval is based on a press release statement from Tredegar Corporation.
In other recent news, Tredegar Corporation, a global manufacturer of aluminum extrusions and polyester films, has unveiled a new product line via its subsidiary, Tredegar Surface Protection. The company has introduced Obsidian Automotive Protective Films, a high-quality range of masking films tailored for the automotive industry. The development of these films is in response to the rising demand for surface protection in automotive applications, as stated by Arijit DasGupta, President of PE Films / Tredegar Surface Protection.
The Obsidian product line is designed to cater to various automotive needs, including interior displays, augmented reality films for heads-up displays, and exterior components like windshields and cameras. These protective films are now available globally through Tredegar's distribution network, supported by the company's manufacturing facilities in the U.S. and China.
In addition to this, Tredegar Corporation reported $705 million in sales from continuing operations in 2023, with manufacturing facilities across North America, South America, and Asia, employing approximately 1,900 people. These recent developments further demonstrate Tredegar Corporation's commitment to innovation and meeting the evolving needs of the automotive sector.
InvestingPro Insights
As Tredegar Corporation (NYSE:TG) prepares to finalize the sale of its Terphane business, recent InvestingPro data provides additional context to the company's financial position. Despite the anticipated $85 million in net proceeds from the sale, InvestingPro Tips indicate that Tredegar "operates with a significant debt burden" and that "short term obligations exceed liquid assets." This sale could potentially alleviate some of these financial pressures.
The company's market capitalization stands at $247.57 million, with a price-to-book ratio of 1.55 as of the last twelve months ending Q2 2024. This valuation comes as Tredegar faces challenges, including a revenue decline of 11.97% over the same period, with total revenue reaching $701.51 million.
On a positive note, Tredegar has shown recent market strength, with InvestingPro data revealing a strong 25.22% price return over the last three months. The stock is currently trading near its 52-week high, with the price at 97.99% of its peak, indicating investor optimism possibly linked to the Terphane sale and its potential impact on the company's financial health.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights with 8 more tips available for Tredegar Corporation, providing a deeper understanding of the company's financial position and market performance.
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