Merger-Bound Berry Global Agrees To Divest Specialty Tapes Unit For ~$540M

Berry Global Group, Inc. BERY shares are trading lower on Tuesday. On Monday, the company disclosed an agreement to sell its Specialty Tapes business to Nautic Partners, LLC, for around $540 million, subject to closing adjustments.

The divestment aligns with its strategy of focusing on higher-growth, consumer-oriented markets. The company plans to use proceeds from the sale to reduce debt.

The sale is expected to close in the first half of 2025, subject to customary closing conditions.

Including the cash received from its recent HHNF spin-off and the Tapes sale, Berry's pro forma net debt as of September 30, 2024, is expected to be approximately $5.9 billion, representing a 3.5x LTM net leverage ratio.

Berry CEO, Kevin Kwilinski, said, “Over the past year, Berry has undergone a significant transformation, completing the spin-off of our HHNF business, enhancing our product mix and optimizing our portfolio. The sale of Tapes further supports these efforts and the continued focus on our high-growth consumer portfolio.”

This month, Berry Global agreed to merge with Amcor plc AMCR in an all-stock transaction, with the deal valuing Berry stock at $73.59 per share.

The companies anticipate a $650 million benefit from synergies by the end of year three, including $530 million in annual pre-tax cost savings, $60 million in financial savings, and $60 million from growth synergies.

Berry Global noted the sale of the Tapes business further reinforces the strategic rationale for the combination and has no material impact on the financial profile of the combined entity.

Price Action: BERY shares are down 1.47% at $70.50 at the last check Tuesday.

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