Cardia Bioplastic/Stellar Films merger to create biopackaging leader

Australia-headquartered biofilms maker Cardia Bioplastics says it has signed a terms sheet with privately held Stellar Films Group under which it is proposed to merge the businesses of the two groups. The merger, should it proceed, is intended to create a leader in sustainable packaging. The proposed merger is subject to completion of satisfactory due diligence by both parties, execution of a sale agreement, shareholder and regulatory approval and other customary closing conditions, with an exclusivity period of four months from 21 November 2014. Cardia, Stellar and the owners of Stellar have agreed to no shop, no talk and no due diligence restrictions for the duration of the exclusivity period. But it will not apply where not responding to a competing proposal would be likely to result in a party breaching its fiduciary obligations.

Under the terms of the proposed merger, Cardia Bioplastics will acquire all of the shares and units issued in Stellar Films and issue ordinary shares in Cardia to the owners of Stellar Films. Following completion of the proposed merger, it is currently anticipated that Cardia shareholders will own 42% of the merged group and the owners of Stellar Films will own 58% of the merged group.

Cardia Bioplastics and Stellar Films originally partnered to produce environmentally friendly Biohybrid films tailored for the global personal care and hygiene products industry. The film produced on Stellar Films proprietary cast film process, is said to exhibit a high performance property profile. It is differentiated through its soft touch and warm feel that is ideal for personal care product applications such as nappies/diapers, feminine or incontinence products.

The company says that the close and efficient cooperation between the companies over the last three years “has clearly drawn out the strategic fit of the two businesses and the major benefits of a merger, including scale and geographic footprint of combined operations, market access and reach, production and operational savings, complementary intellectual property positions, resources to deliver business strategy and high quality management teams.”

The 15-year old Stellar Films is an Australian privately owned company, is headquartered in Melbourne and operates manufacturing facilities in Melbourne and Port Klang, Malaysia. Over the last three years, it has had average sales of over A$21 million and has developed partnerships with customers in over 27 countries throughout North America, Asia, Africa, the Middle East and Australia/New Zealand. In addition, Stellar holds an interest of 50.8% in Akronn Industries, which manufactures silicone-coated paper and film products at its Nilai, Malaysia, operation supplying the global hygiene and medical packaging markets as well as the sustainable energy sector.

Cardia Bioplastics develops, manufactures and markets its patented renewable resource-based materials and finished products, derived from its proprietary technology for the global packaging and plastic products industries. The company holds a strong patent portfolio and its growth is fuelled by the global trend towards sustainable packaging. Established in Australia in 2002, the company is headquartered in Melbourne. Cardia also has a technical centre and resins manufacturing plant is in Nanjing, China, while its manufacturing plants for film and bag products are in Nanjing, China, and São Paulo, Brazil; with further offices in Australia, China, US, Brazil and Malaysia, and a network of leading distributors across the Americas, Asia and Europe.


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