The following typographical amendment has been made to the ‘Sale of Filters business to Centaury Management
Limited and completion of the sale of Packaging business to Mayr-Melnhof Group’ announcement released on 3
October at 07:00 under RNS 4578B.
The original announcement incorrectly stated, both in the section entitled “Principal details of the transaction”, and in
Note 4, that up to £20m deferred earn-out consideration would be payable in two tranches of up to £10m for each of
2022 and 2023, respectively. This should instead state that up to £20m deferred earn-out consideration would be
payable in two tranches of up to £10m for each of 2023 and 2024, respectively
All other details set out in the announcement are correct, and remain unchanged. The full amended text is shown
below.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. FOR IMMEDIATE RELEASE
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
ESSENTRA PLC
A leading global provider of essential components and solutions
SALE OF FILTERS BUSINESS TO CENTAURY MANAGEMENT LIMITED AND COMPLETION OF THE SALE OF PACKAGING BUSINESS TO MAYR-MELNHOF GROUP
- Sale of the Filters business to a wholly owned subsidiary of Centaury Management Limited for an enterprise value of approximately £262.1m, including 100% consolidation of certain joint ventures1 , implying a June 2022 LTM adjusted operating profit multiple of 8.2×2,3
- Consideration is comprised of approximately £200m initial consideration due on completion (on a cash-free, debt-free basis and subject to customary adjustments) and up to £20m deferred earnout consideration
- The transaction is expected to complete no later than 31 January 2023. A Class 1 circular and notice of General Meeting will be published in due course
- The Board intends to use the net transaction proceeds to make a small contribution to its defined benefit pension schemes and prepay a portion of US private placement debt
- The sale of the Packaging business to Mayr-Melnhof completed on 1 October 2022
- The Board intends to return approximately £150m to shareholders via a special dividend after the Filters disposal has completed
- After completion of the sales of the Filters business, Essentra will be established as a pure play components business, with a healthy balance sheet, providing flexibility to pursue organic and inorganic growth opportunities
Commenting on today's announcement, Paul Forman, Chief Executive said:
Principal details of the transaction
On 2 October 2022, Essentra International Limited (the “Seller”), Essentra and the Purchaser entered into
a Sale and Purchase Agreement, pursuant to which the Seller agreed, on the terms and subject to the
conditions of the Sale and Purchase Agreement, to sell Filters to the Purchaser.
The consideration payable by the Purchaser comprises approximately £200m initial consideration, subject
to adjustments after completion by way of a customary completion accounts mechanic in relation to cash,
debt and working capital, and up to £20m deferred earn-out consideration payable in two tranches of up to
£10m for each of 2023 and 2024, respectively, as agreed with the Purchaser in the Sale and Purchase
Agreement. The customary adjustments, which are expected to reduce the initial cash consideration by
approximately £35m, will include certain pension and other liabilities, including approximately £16m of IFRS
16 lease liabilities, which will transfer out of the Group.
The Seller has given certain warranties and indemnities to the Purchaser that are customary for a
transaction of this nature and size.
The transaction is conditional upon various conditions, including the satisfaction (or waiver, where
applicable) of the following:
- Approval of a resolution approving the transaction by shareholders at a General Meeting of Essentra
- The completion (in all material respects) of a group reorganisation to achieve the separation of Filters from the remainder of the Essentra group
- There not being in force any applicable law that prohibits or renders illegal the sale or purchase of shares
The Board expects that, subject to the satisfaction and/or waiver (where applicable) of the conditions to the
transaction, completion will occur no later than 31 January 2023.
Essentra has agreed to pay a fee of £5.0m, if, in order to comply with its fiduciary duties, the Board
exercises its right to withdraw, suspend, qualify or adversely modify or amend its recommendation in
relation to the disposal, except to the extent that such change of recommendation is caused by certain
breaches of the Purchaser’s obligations under the Sale and Purchase Agreement, or the Seller is otherwise
entitled to terminate the Sale and Purchase Agreement pursuant to its terms.
For the year ended 31 December 2021 Filters delivered adjusted operating profit of £28.2m2. The gross
assets at 30 June 2022 were £249.7m6.
Class 1 transaction
The transaction constitutes a Class 1 transaction under the Listing Rules. Completion is therefore
conditional upon the approval of Essentra’s shareholders and a circular will be sent to the Company’s
shareholders in due course. Completion is also subject to customary closing conditions as set out above.
Peel Hunt LLP is acting as sole sponsor to Essentra in regard to the sale of the Filters business. Goldman
Sachs International is acting as exclusive financial advisor to Essentra in regard to the sale of the Filters
business. Lazard & Co., Limited is acting as independent financial adviser to the Board of Essentra.
Completion of the sale of Packaging to Mayr-Melnhof Group
Further to the announcement on 24 June 2022, Essentra is pleased to confirm, following receipt of
regulatory approvals and shareholder approval, the successful completion of the disposal of ESNT
Packaging & Securing Solutions Limited and Essentra Packaging US Inc and their respective subsidiary
companies (“Packaging”) to Mayr-Melnhof Group (“MM”) for £312 million on a cash free, debt free basis
and subject to customary adjustments. The transaction completed on 1 October 2022.
As previously communicated, the transaction excludes Packaging’s business in India (which represents less
than 1% of Group revenues). The Company is pleased to announce that this business has been sold to
BBM Bommidala who will be well placed to integrate the Bangalore site into their current portfolio.
Market Abuse Regulation statement
This announcement contains inside information
The person responsible for arranging the release of this announcement on behalf of the Company is Jon
Green, Company Secretary of Essentra.
Investor enquiries:
Essentra plc
Jack Clarke, Chief Financial Officer
Claire Goodman, Group Investor Relations Manager
Tel: +44 (0)1908 359100
Media enquiries:
Tulchan Communications LLP
Olivia Peters
Lisa Jarrett-Kerr
Tel: +44 (0)20 7353 4200
Notes
- The enterprise value of up to £262.1m is based on 100% consolidation of certain joint venture entities (China Tobacco
Essentra (Xiamen) Filters Co., Ltd and ITC Essentra Limited) (the “JVs”), which are accounted for as subsidiaries of
Essentra in its consolidated financial statements due to a control achieved via board membership. Of this £262.1m
enterprise value, £42.1m relates to the Filters’ business non-controlling interests in the JVs - The term adjusted excludes the impact of amortisation of acquired intangible assets and adjusting items
- Multiple of 8.2x based on an enterprise value of £262.1m and June 2022 LTM adjusted operating profit of £31.8m.
Based on 100% share of the JV and includes earn-out consideration of up to £20m - Up to £20m deferred earn-out consideration (up to £10m achievable for each of 2023 and 2024, respectively)
- 2021 USPP repayments are on a pro rata basis at par and without make-whole premium
- The value of gross assets excludes intercompany receivables and cash which will be settled as part of the transaction
Cautionary forward-looking statement
This announcement contains forward-looking statements based on current expectations and assumptions.
Various known and unknown risks, uncertainties and other factors may cause actual results to differ from
any future results or developments expressed or implied by the forward-looking statement. Each forwardlooking statement speaks only as of the date of this announcement. The Company accepts no obligation to
revise or publicly update these forward-looking statements or adjust them to future events or
developments, whether as a result of new information, future events or otherwise, except to the extent
legally required.
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom
may be restricted by law and, therefore, any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about, and observe, any applicable requirements. Any
failure to comply with these requirements or restrictions may constitute a violation of the securities laws or
regulations of any such jurisdiction. This announcement has been prepared for the purposes of complying
with English law and the UK Listing Rules and the information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in accordance with the laws and
regulations of any jurisdiction outside of England.
No offer or solicitation
This announcement does not constitute or form part of any offer or invitation to purchase, otherwise
acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise
dispose of, issue, purchase, otherwise acquire or subscribe for, any security.
No profit forecasts or estimates
No statement in this announcement is intended as a profit forecast or estimate for any period.
Important information relating to financial advisers for the Filters transaction
Peel Hunt LLP (“Peel Hunt”), which is authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for Essentra plc as sponsor and for no one else in connection with
the transaction and will not be responsible to anyone other than Essentra plc for providing the protections
afforded to clients of Peel Hunt or for providing advice in relation to in this announcement. Apart from the
responsibilities and liabilities, if any, which may be imposed upon Peel Hunt by FSMA or the regulatory
regime established thereunder, Peel Hunt and its subsidiaries, branches and affiliates, and such entities’
respective directors, officers, employees and agents do not accept any duty, responsibility or liability
whatsoever or make any representation or warranty, express or implied, concerning the contents of this
announcement, including its accuracy, completeness or verification, or concerning any other statement
made or purported to be made by it, or on its behalf, in connection with Essentra plc or the transaction, and
nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect,
whether as to the past or future. Peel Hunt accordingly disclaims, to the fullest extent permitted by law, all
and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to above)
which it might otherwise have in respect of this announcement, or any such statement.
Goldman Sachs International (“Goldman Sachs”), which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting exclusively as financial adviser to the Board of Essentra plc and no one else in
connection with the transaction and will not be responsible to anyone other than the Board of Essentra plc
for providing the protections afforded to clients of Goldman Sachs nor for providing advice in relation to the
transaction or any other matters referred to in this announcement. Neither Goldman Sachs nor any of its
affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether
in contract, in tort, under statute or otherwise) to any person who is not a client of Goldman Sachs in
connection with the transaction, this announcement, any statement contained herein or otherwise.
Lazard & Co., Limited (“Lazard”), which is authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively as financial adviser to the Board of Essentra plc and no one else in
connection with the transaction and will not be responsible to anyone other than the Board of Essentra plc
for providing the protections afforded to clients of Lazard, nor for providing advice to any other person in
relation to the transaction or any other matters referred to in this announcement. Neither Lazard nor any of
its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in
connection with this announcement, any statement contained herein or otherwise.
