Berry Global agrees US$3.6B strategic merger with Glatfelter in healthcare and hygiene expansion

08 Feb 2024 --- Berry Global is entering a US$3.6 billion merger with Glatfelter Corporation. The move will see the majority of Berry’s Health, Hygiene and Specialties segment combined with its Global Nonwovens and Films business (HNNF) to create a new publicly traded company, NewCo.

The boards of both companies have approved the merger, saying NewCo will become a global leader in the growing specialty materials industry and serve the world’s largest brand owners across global end markets with favorable long-term growth dynamics.

HHNF has an extensive portfolio of healthcare, hygiene and specialty technologies, and Glatfelter provides “a broad range of innovation capabilities and sustainability solutions.” Berry will own approximately 90% of NewCo.

The tie-up will offer both polymer- and fiber-based solutions in all global markets. Together, HHNF and Glatfelter generated pro forma revenue of approximately US$3.6 billion and Adjusted EBITDA of approximately US$455 million based on combined results for the last 12-month period ending December 2023.

“This announcement is the culmination of a comprehensive review of strategic alternatives to determine the value-maximizing path forward for Berry shareholders,” says Kevin Kwilinski, Berry’s CEO.

“We believe these two businesses, in combination, can drive significant value for shareholders with complementary portfolios, positioning each for greater success. Following completion of the transaction, Berry will become a pure-play provider of innovative, sustainable global packaging solutions, which we believe will deliver even more predictable earnings growth for Berry shareholders.”

“Additionally, we believe HHNF, in combination with Glatfelter, will thrive as an independent company that is positioned to drive long-term growth with its global brand-owner customers,” he says.

Health and hygiene products are expected to grow both businesses substantially.Consumer packaging leadership
Packaging industry analyst Neil Farmer tells Packaging Insights: “The deal is important because it establishes Berry as a purely consumer goods packaging business with revenues of US$10.2 billion.”

“I see a trend in the industry of international consumer goods businesses establishing closer ties with packaging groups such as Berry. These companies wish to work closely to establish new sustainable packaging solutions and play a valuable role in creating the circular economy.”

“Berry has great innovations, manufacturing at scale, tooling services and speed of delivery, all from a single source. I call this the Total Packaging Solution and in a global world this is a vital service to offer customers.”

“The financial and commercial benefits of the deal should allow Berry to concentrate purely on this type of offering.”

In September last year, Berry launched a review of its Health, Hygiene & Specialties (HH&S) segment. The merger is the culmination of this review and strategic alternatives to determine the value-maximizing path forward for Berry shareholders. The remaining HH&S businesses, including the company’s tapes business, will be retained by Berry.

The proposed transaction marks an important milestone in Berry’s transition to becoming “a streamlined and focused provider of consumer packaging,” according to the company.

Pro forma for the separation transaction, Berry generated approximately US$10.2 billion of revenue and US$1.8 billion in adjusted EBITDA over the last 12 months, ending December 30, 2023.

Ongoing evolution
In conjunction with today’s announcement, Berry will change the name of its Engineered Materials segment to Flexibles to showcase its continued evolution toward high-value products and solutions.

“The uniting of our organizations creates a premier nonwovens supplier and a global leader in specialty materials, with the talent, technologies, scale and footprint to deliver commercial and operational excellence, and a wide range of solutions for our customers,” says Thomas Fahnemann, Glatfelter’s president and CEO.

“Our combined company is scaled to accelerate innovation and leverage our intellectual property over a large worldwide commercial platform and is well positioned to deliver substantial shareholder value.”

By Louis Gore-Langton

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