Mativ Holdings’s engineered paper division is being acquired by BMJ subsidiary Evergreen Hill Enterprise.
Mativ Holdings Inc. is planning to divest its “engineered papers” division, which includes materials used for the rolling and packaging of cigarettes, in a deal worth US$620 million.
Evergreen Hill Enterprise Pte. Ltd., a Singapore-based group and an affiliate of Indonesia’s BMJ, will be acquiring the division, offering a comprehensive solution for cigarette packaging, excluding the tobacco itself.
Following the transaction, Mativ anticipates netting approximately US$575 million, which will be used to reduce a little over one-third of its existing debt.
In its shift away from the tobacco industry and towards its next phase, Mativ aims to reallocate capital and reduce leverage, with the sale of the division that houses the SWM brand, a core component.
Engineered papers is part of Mativ’s fiber-based solutions division, which encompasses specialty and premium packaging, commercial print, digital transfer, consumer products, and more.
The companies involved expect the deal to be finalized in the fourth quarter of this year, subject to regulatory approvals. Additionally, they must navigate a mandated labor consultation period in France, where SWM has a strong historical presence.
Concurrently, Mativ announced a reduction in its annual dividend from US$88 million (US$1.60 per share) to US$22 million (US$0.40 per share), representing a quarter of its previous total. The company also plans to repurchase US$30 million worth of shares. Short-term projections indicate a decline in annual revenues to $2.2 billion.
The sale price of US$620 million reflects a multiple of approximately 6.5 times the unit's gross earnings. In 2022, the division recorded annual revenues of US$530 million.
In a release, BMJ stated, “The SWM Engineered Paper business will continue to operate as a standalone business with its independent management board. As such, our business will continue to operate as usual. There will not be an integrated structure between BMJ and SWM so that both companies will maintain the autonomy of action and confidentiality of projects. Having said that, BMJ is delighted to be affiliated with SWM Engineered Paper business, a prominent supplier of engineered papers. This affiliation will open opportunities for BMJ to collaborate with SWM Engineered Paper business in some strategic areas, including but not limited to offering complimentary geographic reach and product lines, ultimately providing comprehensive and unparalleled value to the customers and stakeholders.