- Acquisition enhances sustainable paper-packaging targeting e-commerce fulfillment channel -
Nuevopak designs and develops a range of machines to provide void-fill and cushioning protective packaging solutions. Nuevopak currently supplies IPG with paper dispensing machines and converted paper for protective packaging distribution in
This acquisition is expected to further enhance IPG’s protective packaging business and strengthen its product bundle, thereby supporting IPG’s vision to be a global leader in packaging and protective solutions. The acquisition is also expected to enable IPG to secure dispensing machine supply, vertically integrate its paper converting operation, and expand market share in this growing, sustainability-focused market.
“Protective packaging, and our ability to offer a comprehensive solution, including consumable products, dispensing machines, and field support services, continues to be a strategic portion of our product bundle,” said
The acquisition is subject to customary closing conditions and approvals and is expected to close in the third quarter of 2021.
Financial Highlights of the Acquisition
IPG expects to achieve a post-synergy Adjusted EBITDA1 acquisition multiple on the Nuevopak transaction that is approximately 5x by 2023. In management’s view, the post-synergy multiple disclosure is more representative of the contribution Nuevopak can offer within IPG, compared to Nuevopak’s relatively modest contribution on a stand-alone basis given its early stage growth profile. Expected cost synergies are considered to be low-risk by the Company’s management, and include margin expansion through the vertical integration of IPG’s paper converting, as well as savings on future capital expenditures by leveraging Nuevopak’s strategic parts sourcing and assembly capabilities. The Company also believes additional revenue synergies will materialize as it continues to scale its protective packaging business across multiple market verticals, led by the continued demand growth in the e-commerce fulfillment vertical and customer preferences for sustainable packaging solutions. In total, deal and integration costs are expected to be approximately
IPG expects to finance the acquisition with funds available under its
1) Adjusted EBITDA is a non-GAAP financial measure. Its use is consistent with IPG's definition as provided in its historical public filings (including its most recent Management’s Discussion and Analysis filed with the
About
Forward-Looking Statements
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, "forward-looking statements"), which are made in reliance upon the protections provided by such legislation for forward-looking statements. All statements other than statements of historical facts included in this press release, including statements regarding: the closing of the acquisition, including the expected timing; the purchase price for the acquisition (including the amount of contingent consideration actually earned) and the funding of such purchase price; the benefits that the acquisition is expected to bring to IPG’s business, operations, and financial results; the enhancement, extension and expansion of IPG’s product offering, global presence and market share; the continued growth of the e-commerce vertical for the foreseeable future and expected demand in the e-commerce vertical; the strategic fit of Nuevopak with IPG’s existing product portfolio and operations; IPG’s continued approach to acquisitions; expected revenue, Adjusted EBITDA, earnings, and cost and revenue synergies; savings on future capital expenditures; our paying down of debt; and the expected deal and integration costs and timing of such costs may constitute forward-looking statements. These forward-looking statements are based on current beliefs, assumptions, expectations, estimates, forecasts and projections made by IPG’s management. Words such as "may," "will," “should,” "expect," "continue," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "seek" or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although IPG believes that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: business conditions and growth or declines in IPG’s industry, IPG’s customers’ industries and the general economy; the post-closing performance of Nuevopak, including the expected Adjusted EBITDA and cost and revenue synergies; the anticipated benefits from IPG’s capital expenditures; the quality and market reception of IPG’s products; customer preferences for sustainable packaging solutions; IPG’s anticipated business strategies; risks and costs inherent in litigation; IPG’s ability to maintain and improve quality and customer service with current and new customers; anticipated trends in IPG’s business; anticipated cash flows from IPG’s operations; availability of funds under IPG’s credit facility; and IPG’s ability to continue to control costs. IPG can give no assurance that these estimates and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. Readers are cautioned not to place undue reliance on any forward-looking statement. For additional information regarding important factors that could cause actual results to differ materially from those expressed in these forward-looking statements and other risks and uncertainties, and the assumptions underlying the forward-looking statements, you are encouraged to read "Item 3 Key Information - Risk Factors", “Item 5 Operating and Financial Review and Prospects (Management’s Discussion & Analysis)” and statements located elsewhere in IPG’s annual report on Form 20-F for the year ended
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