CHARLOTTE, N.C. - Packaging (NYSE:PKG) giants Novolex and Pactiv Evergreen Inc. (NASDAQ: PTVE) have announced a definitive agreement for Novolex to acquire Pactiv Evergreen in an all-cash transaction valued at $6.7 billion, inclusive of net debt. This deal will unite two complementary businesses in the food, beverage, and specialty packaging industry, creating a broad product platform. Pactiv Evergreen, with a current market capitalization of $2.63 billion and last twelve months EBITDA of $774 million, has demonstrated strong momentum with a 27.71% price return over the past six months.
The transaction, announced today, will result in Pactiv Evergreen shareholders receiving $18.00 per share, a 49% premium over the two-month unaffected volume-weighted average trading price as of December 2, 2024. Post-acquisition, Pactiv Evergreen will become a private entity, and its common stock will be delisted from Nasdaq. According to InvestingPro analysis, the stock is currently trading above its Fair Value, with a Financial Health Score of 2.75 (labeled as "Good"). InvestingPro subscribers can access detailed valuation metrics and 12 additional ProTips about PTVE's financial outlook.
According to Stan Bikulege, Chairman and CEO of Novolex, the merger will enhance the company's innovative and sustainable packaging solutions, benefiting from Pactiv Evergreen's strong product portfolio and experienced team. Michael King, President and CEO of Pactiv Evergreen, expressed confidence that the merger maximizes shareholder value and marks a promising new chapter for the company.
The combined company aims to advance product innovation, customer service, and sustainability, leveraging a manufacturing footprint across North America and a diverse set of substrates including fiber, resin, and recycled content.
The acquisition is supported by Apollo Funds, the majority shareholder of Novolex since 2022, and Canada Pension Plan Investment Board (CPP Investments), which will invest approximately US$1 billion, becoming a significant minority shareholder in the new entity.
The transaction is subject to regulatory approvals and customary closing conditions, with no financing condition attached, and is expected to complete in mid-2025. Barclays (LON:BARC) Bank PLC, Morgan Stanley (NYSE:MS) & Co. LLC, and RBC Capital Markets, LLC are providing financial advice to Novolex, while Goldman Sachs & Co. LLC and Lazard (NYSE:LAZ) Frères & Co. LLC are advising Pactiv Evergreen.
This strategic combination leverages both companies' commitments to sustainability, offering recyclable, compostable, and reusable packaging solutions. The announcement is based on a press release statement, marking a significant move within the packaging industry. With total debt of $3.78 billion and a current ratio of 1.93, InvestingPro's comprehensive research report provides deeper insights into Pactiv Evergreen's financial position and growth prospects, available alongside 1,400+ other detailed company analyses.
In other recent news, Pactiv Evergreen has reported robust Q3 2024 results and strategic shifts in its business operations. The company saw revenues reaching $1.3 billion and adjusted EBITDA at $214 million. Adjusted earnings per share were reported at $0.36 with a healthy free cash flow of $190 million. A significant development was the completion of the sale of its mill operations, a move towards a more capital-efficient business model focusing on its core North American converting operations. This shift is expected to enhance profitability and reduce earnings volatility. In an update from RBC Capital Markets, the firm increased its price target for Pactiv Evergreen to $14.00, endorsing an Outperform rating for the company's stock, reflecting confidence in the company's strategic initiatives and its ability to navigate through current market weaknesses. These are the recent developments in Pactiv Evergreen's business strategy and financial performance.
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