Multi-Color Announces Agreement to Acquire Constantia Labels

After completion, Multi-Color will generate pro forma sales of roughly $1.6 billion and EBITDA of $300 million.

Multi-Color Corporation (“Multi-Color”) (NASDAQ: LABL) announced today that it has signed a definitive agreement to acquire the Labels Division of Constantia Flexibles (“Constantia Labels”) from Constantia Flexibles GmbH (“Constantia Flexibles”) for approximately $1.3 billion (€1.15 billion), payable in cash and stock.

The combined annual revenues and EBITDA of the two businesses will be approximately $1.6 billion and $300 million, respectively. The combination brings together Constantia Labels’ high performing Food and Beverage business with Multi-Color’s strong Wine and Spirit, and Home and Personal Care platforms, and emerging global position in Healthcare. Additional growth opportunities for Multi-Color exist in Home and Personal Care by utilizing Constantia Labels’ European operational footprint and assets. Growth opportunities for Constantia Labels exist in Food & Beverage and derive from Multi-Color’s US operational footprint and assets. The stronger combined footprint in Asia will provide further revenue opportunities.

The strengthened global platform creates a much greater acquisition pipeline and higher potential synergies from future acquisitions, especially in Food and Beverage, the largest segment of the global labels market.

“The acquisition of Constantia Labels marks a major milestone in the evolution of Multi-Color,” said Nigel Vinecombe, Executive Chairman of Multi-Color. “We are bringing together complementary talents in markets and geographies, diversifying our business and creating a global leader with a transaction that is financially attractive, which will better help us serve our customers” he added.

Management estimates the pre-synergy forward EBITDA multiple for acquiring Constantia Labels is approximately 10.25x. The forward EBITDA multiple including pro forma run-rate synergies is estimated to be 9.2x. Management expects the transaction to be meaningfully accretive to Core EPS in the Fiscal Year ending March 2019, the first full-year of combined results, and supports Multi-Color’s total shareholder return objective to exceed 20% compounded annual growth over the next five years.

Cost synergies are anticipated to reach $15 million (or 2% of acquired revenues) by Fiscal Year March 2020 through a combination of procurement, SG&A, and manufacturing efficiencies. As an example, Multi-Color will utilize Constantia Labels’ pressure sensitive substrate manufacturing capability in the US and Europe to drive future efficiencies. Both companies currently generate EBITDA margins of approximately 18%.

As part of the transaction, Mike Henry, current EVP and Head of Constantia Labels, is expected to become CEO-elect of Multi-Color Corporation, and Constantia Flexibles will become a 16.6% shareholder in Multi-Color. Henry (51), brings 17 years of experience in the labels sector, having started his career at KPMG as a Chartered Accountant, spent 14 years in senior management roles for Spear Labels (based in Cincinnati), and has led Constantia Labels for the past three years. Current Multi-Color CEO, Vadis Rodato, is expected to retire in early 2018 after a transition period. Nigel Vinecombe will remain Executive Chairman.

read more/source: http://phx.corporate-ir.net/phoenix.zhtml?c=78090&p=irol-newsArticle&ID=2286714

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