Glatfelter Corporation (NYSE:GLT), a Pennsylvania-based paper mills company, has announced a series of transactions with Berry Global Group, Inc. (NYSE:BERY), including a spin-off and subsequent merger of Berry's nonwovens and hygiene films business, which will result in the renaming of Glatfelter to Magnera Corporation.
On Monday, Glatfelter disclosed the waiver of certain conditions previously required for the completion of the transactions, specifically regarding the private letter ruling from the IRS and the delivery of tax opinions from counsel. Despite these waivers, tax opinions will still be provided at the time of closing.
Additionally, an amendment to the Tax Matters Agreement was made to address the parties' responsibilities for transaction taxes and to reflect the waivers of the IRS ruling and tax opinions conditions.
The transactions, which were first outlined in definitive agreements with Berry and its subsidiaries, will involve the spin-off of Berry's global nonwovens and hygiene films business into a separate entity, Spinco, followed by a distribution of Spinco shares to Berry stockholders and a merger with a subsidiary of Glatfelter.
The registration statement for the transaction was filed with the SEC on August 23, 2024, became effective on September 17, 2024, and was supplemented on October 11, 2024. Glatfelter shareholders received the proxy statement/prospectus starting September 20, 2024.
Berry believes that if the Spinco Distribution were deemed taxable, the resulting taxable gain would be immaterial based on Berry's adjusted tax basis in the business being spun off.
The amendment to the Tax Matters Agreement and the legal opinion filed as Exhibit 8.1 to Glatfelter's Current Report on Form 8-K supersede previous filings.
This strategic move is expected to reshape Glatfelter's business profile significantly, as the company prepares to operate under its new name, Magnera Corporation, upon the closing of the transactions.
This news is based on a press release statement.
In other recent news, Glatfelter, a global supplier of engineered materials, has reported a significant improvement in its financial performance for the second quarter of 2024. The company's adjusted EBITDA rose by $8.3 million year-over-year, driven mainly by its Composite Fibers and Spunlace segments.
Despite a softer demand in the Airlaid Materials segment, Glatfelter expects an increase in Airlaid volume in the latter half of the year. Glatfelter also reaffirms its full-year EBITDA guidance of $110 to $120 million, indicating confidence in its financial outlook.
However, it's worth noting that the company's net cash flow for the full year is projected to be negative $30 million. Despite this, Glatfelter remains optimistic, driven by its focus on new product innovation, positive price cost spread across all segments, and favorable working capital projections.
These are recent developments that investors should be aware of.
InvestingPro Insights
As Glatfelter Corporation (NYSE:GLT) prepares for its significant transformation into Magnera Corporation through the merger with Berry Global Group's nonwovens and hygiene films business, investors should consider some key financial metrics and insights provided by InvestingPro.
Currently, Glatfelter has a market capitalization of $77.8 million USD, reflecting its current size before the merger. The company's Price to Book ratio stands at a low 0.38, suggesting that the stock might be undervalued relative to its book value. This could be particularly interesting for value investors considering the upcoming corporate restructuring.
InvestingPro Tips highlight that Glatfelter operates with a significant debt burden and is quickly burning through cash. These factors may have influenced the company's decision to pursue this strategic merger, potentially seeking to improve its financial position and operational efficiency.
It's worth noting that Glatfelter's revenue for the last twelve months as of Q2 2024 was $1,307.0 million USD, with a revenue growth of -11.74% over the same period. This decline in revenue might be another driving factor behind the company's strategic move to merge and rebrand.
For investors looking for a more comprehensive analysis, InvestingPro offers additional tips and insights that could be valuable in assessing the potential impact of this merger on Glatfelter's future performance.
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