CCL to buy Innovia; deal worth C$1.13 bn

Canada-based label and packaging maker CCL Industries Inc is to buy Innovia Group, which supplies the new UK plastic £5 note, for around C$1.13 billion, to allow CCL to significantly expand its portfolio into the security market. Innovia is owned by a consortium of UK-based private equity investors managed by the Smithfield Group. The transaction is expected to close in the first quarter of 2017.

The Smithfield Group buys, operationally improves and grows businesses headquartered in Europe and North America.

Innovia, headquartered in Wigton in the UK, is a leading global producer of speciality, high performance, multi-layer, surface engineered BOPP films for label, packaging and security applications. The business has film extrusion, coating and metallising facilities across the UK, Belgium and Australia as well as high security, specialised polymer banknote operations in the UK, Australia and Mexico with 1,200 employees and sales offices in 16 countries around the world.

For 2017, Innovia is expected to generate net revenue of approximately C$570 million and estimated EBITDA of C$155 million.

Geoffrey Martin, President/CEO of CCL, said CCL will be propelled into the fast growing polymer bank note market.

He also added, “CCL’s 2017 pro-forma annual sales are forecast to exceed C$5 billion post close. The transaction will be financed from existing capacity in our revolving credit facility and a new US$450 million, two-year term loan provided by a syndicate of banks led by Bank of Montreal. At closing our expected pro-forma net debt to EBITDA leverage ratio is estimated at a conservative 2.5 times, with additional balance sheet liquidity of approximately C$700 million.”

Meanwhile, Innovia has been in the spotlight after it emerged the new £5 note contains a small amount of tallow, derived from animal waste products. A petition to ban the note has attracted more than 132,000 signatures, with the Bank of England adding that Innovia is working on "potential solutions" to the animal fat issue.