Pactiv Evergreen Shares Surge Following Novolex Acquisition Deal
A significant development has occurred in the packaging industry. Shares of Pactiv Evergreen Inc. (NASDAQ:PTVE) rose 19.5% in pre-market trading following the announcement that Novolex, owned by Apollo Global Management, will acquire the packaging products manufacturer for $6.7 billion. The agreement was announced on Monday.
The purchase price of $18.00 per share represents a substantial premium of 32.4% over Pactiv's closing price on December 2, 2022, which was the last trading day prior to news emerging about Novolex evaluating the acquisition of the company.
The definitive agreement between Novolex and Pactiv Evergreen will create a significant asset in the food, beverage, and specialty packaging sectors by merging two complementary businesses. This merger will form one of the industry's most diverse substrate offerings, featuring a broad product platform that includes over 250 brands and 39,000 SKUs. The combined entity will have a wide manufacturing footprint and a large distribution network, enhancing its ability to serve a diverse range of customers.
Stan Bikulege, Chairman and CEO of Novolex, expressed excitement about the merger, emphasizing its alignment with the company's growth strategy and commitment to innovation, sustainability, and customer focus. He highlighted the complementary nature of Pactiv Evergreen's product portfolio and the shared values of both companies.
Michael King, President and CEO of Pactiv Evergreen, noted in his statement regarding the agreement the potential to maximize shareholder value and the progress made in Pactiv Evergreen's transformation over the past three years.
The transaction is supported by funds managed by Apollo's affiliates and the Canada Pension Plan Investment Board (CPP Investments). These funds will invest approximately $1 billion and will be a significant minority shareholder in the combined company.
The agreement, which includes Pactiv Evergreen's net debt as of September 30, 2024, offers a 49% premium based on the two-month unaffected volume-weighted average trading price up to December 2, 2024. Following the completion of the transaction, Pactiv Evergreen will become a private company, and its common shares will be delisted from Nasdaq. The combined company will operate under the leadership of Novolex's Stan Bikulege.
The Pactiv Evergreen Board has approved the transaction, which is now subject to regulatory approvals and other customary closing conditions. The agreement has also received the approval of Packaging Finance Limited, the majority shareholder of Pactiv Evergreen, and does not require additional shareholder approval. The transaction is expected to close in mid-2025 and is not contingent on financing.