SIG recently announced that it has entered into an agreement to acquire Pactiv Evergreen’s Asia Pacific Fresh operations (“Evergreen Asia”) for an enterprise value of US $ 335 million.

For the twelve months to 31 December 2021, Evergreen Asia is expected to record revenue of around US$ 160 million and adjusted EBITDA of around US$ 28 million. The acquisition will represent approximately 7% of Group revenue on a proforma basis. The transaction is expected to close in the second or third quarter of 2022, subject to customary closing conditions, and will be debt financed. The acquisition will be accretive to cash flow and earnings per share from year one.

Evergreen Asia supplies filling machines, cartons, closures and after-sales service to its customers in the fresh segment, mainly for milk, and has production facilities in China mainland, South Korea and Taiwan. They are the leading supplier in China mainland, accounting for approximately 50% of its revenue. The remaining revenue is largely derived from South Korea and Taiwan, among the leading suppliers. The business is starting to develop in other South East Asian markets, where SIG is already well-positioned in the aseptic segment.

The acquisition will enable SIG to increase its share of wallet with existing customers and access a new customer base. SIG plans to use its local R&D presence and innovation capabilities as well as its marketing expertise to introduce more innovative packaging formats in the fresh dairy market.

Lidong Fan, president & general manager Asia Pacific North, said, “In China, milk is increasingly seen as an important source of protein and as good for health, representing an attractive growth opportunity for fresh as well as aseptic milk. The Evergreen Asia business adds fresh milk cartons to our strong liquid dairy portfolio which, until now, has been mainly focused on single serve packs and on-the-go consumption. As fresh milk is mainly consumed at home, this acquisition broadens our range with an increase in family-sized packs.”

The enterprise value represents a multiple of around 12x the expected adjusted EBITDA for the last twelve months to 31 December 2021. Including the run rate of expected cost synergies and a board supply arrangement for coated carton board market, this multiple would be around 9.5x. The transaction will be financed through a bridge facility with a maturity of up to 18 months. SIG plans to refinance the bridge facility and access the debt capital markets for the long-term financing of the acquisition with a bond or other instrument.