PITTSBURGH, Jan. 08, 2025 (GLOBE NEWSWIRE) — Matthews International Corporation (NASDAQ GSM: MATW) and affiliates of SGS & Co have entered into a definitive agreement under which Matthews will sell its interest in SGK Brand Solutions to a newly formed entity created by affiliates of SGS, which will combine SGK and SGS.
Under the terms of the agreement, Matthews will realize $350 million of total upfront consideration, which will include $250 million in cash at closing, $50 million of preferred equity in the new entity and the retention of approximately $50 million in trade receivables under the Company’s securitization program. In addition, Matthews will receive a 40% interest in the common equity of the new entity. Matthews will also retain its German roto-gravure packaging business and other related investments currently within the SGK Brand Solutions reporting segment. The new entity will have an enterprise value of approximately $900 million, representing an adjusted EBITDA multiple of 9x on a trailing-twelve-month basis.
On a go-forward basis, the new entity expects to realize over $50 million in annual run rate cost synergies over a 30-month expected integration period creating an opportunity for significant value creation in Matthews’ 40% ownership interest. Gary R. Kohl, current President of SGK, will lead the new entity as CEO, and Matthew T. Gresge, the current CEO of SGS, will become Executive Chairman of the Board of the new company, in addition to working closely with Mr. Kohl to lead the integration of the newly combined businesses.
Matthews expects the immediate cash proceeds from the transaction of approximately $250 million will be used predominantly for the repayment of debt while other consideration received in the future will also be used to reduce debt. Following the closing of the transaction, Matthews will record its investment and its portion of the income of the new entity under the equity basis of accounting and will no longer reflect full consolidation of the SGK business in its financial statements.
“Over the past several years, we have undertaken a deliberate process to maximize the value of our diversified business units, including SGK. This process has involved extensive discussions with multiple prospective partners, resulting in today’s value-enhancing sale,” said Joseph Bartolacci, Chief Executive Officer of Matthews. “As a result of this transaction, we are moving toward a more streamlined business structure that can be better valued by the public equity markets. The structure of the transaction provides Matthews with immediate cash to prioritize debt repayment while providing a path for a full exit of the business at a strong valuation. The Board’s review of strategic alternatives for our portfolio of businesses remains ongoing and we are committed to creating increased value for our shareholders.”
The transaction is expected to be completed in mid-2025, subject to customary closing conditions, including regulatory approvals.
Advisors
J.P. Morgan Securities LLC is serving as financial advisor, K&L Gates is serving as lead transaction counsel and Covington & Burling LLP is serving as antitrust counsel to Matthews on the transaction. Orrick, Herrington & Sutcliffe is serving as legal counsel to SGS on the transaction.
About SGK Brand Solutions
SGK is a brand and content powerhouse focused on brand creation, brand activation, and brand stewardship, providing global solutions to a variety of market verticals, including food and beverage, home and personal care, and lifestyle.
About SGS & Co
SGS & Co is a global brand agency comprising nearly 4,800 associates across 30+ countries that deliver speed and quality brand work through technology and teams for our world-class clients. SGS & Co is comprised of two teams, Marks (Creative) and SGS (Production) to deliver end-to-end in design, graphic services, production, technology, and process optimization. SGS & Co fosters a client-first culture to exceed client expectations and help them win. SGS & Co is deeply committed to diversity, equity, and inclusion and a more sustainable future.
About Matthews International
Matthews International Corporation is a global provider of memorialization products, industrial technologies, and brand solutions. The Memorialization segment is a leading provider of memorialization products, including memorials, caskets, cremation-related products, and cremation and incineration equipment, primarily to cemetery and funeral home customers that help families move from grief to remembrance. The Industrial Technologies segment includes the design, manufacturing, service and sales of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries. The SGK Brand Solutions segment is a leading provider of packaging solutions and brand experiences, helping companies simplify their marketing, amplify their brands and provide value. The Company has over 11,000 employees in more than 30 countries on six continents that are committed to delivering the highest quality products and services.
