KINGSEY FALLS, QC (News release) -- Cascades Inc. is pleased to announce that it has entered into an agreement with an affiliate of funds managed by affiliates of Apollo Global Management, Inc. (together with its consolidated subsidiaries, "Apollo") to sell its 57.6% equity interest in Reno De Medici S.p.A. ("Reno de Medici", or "RDM") for an all-cash price of €1.45 per share, corresponding to a total net cash consideration of approximately €315.3 million (approximately CAN$461 million). The purchase price is not subject to adjustment, except in case of potential leakages of value to the seller (such as, among others, dividends or returns of capital), provided that RDM's 2020 dividend that was paid to the shareholders in May 2021 will not be considered a leakage.
The selling price represents a 24% premium to RDM's 90-day volume weighted moving average share price, and a 6.9x multiple to RDM's last twelve months adjusted operating income before depreciation as of March 31, 2021. Upon closing of the recently announced acquisition of Eska Group, the RDM group operations will grow to nine mills and five specialized cutting and sheeting centers across Europe and the USA.
The transaction is expected to be completed in the third quarter of 2021 and is subject to customary closing conditions, including required merger control approvals.
"The monetization of our RDM investment reflects our commitment to creating long-term value for the Company and our shareholders" stated Mario Plourde, President and Chief Executive Officer. "The timing of this divestiture allows Cascades to monetize the value generated by RDM's multi-year transformation initiatives, which have helped drive the significant increase in Reno de Medici's share price over the past year. Strategically, exiting our Boxboard Europe segment is aligned with our plan to focus on strengthening the competitive positioning of our core North American packaging and tissue papers business operations. To this end, proceeds from the divestiture will support ongoing strategic modernization initiatives and key projects and allow Cascades to strategically return capital to shareholders and proactively manage our debt profile."
"Today's announcement signals the end of our Company's successful 35-year operating history in Europe. While Cascades is turning a page to focus on North America, we are confident that the team at Apollo will be an ideal strategic partner to support RDM's future growth. We would like to thank Michele Bianchi and the Reno management team as well as all of the employees for the successful and positive partnership we have enjoyed with them over these many years," Mr. Plourde said in closing.
Or ... if you'd rather read Apollo's release, here it is:
NEW YORK (News release) -- Apollo Global Management, Inc. (together with its consolidated subsidiaries, "Apollo" or the "Firm") today announced that certain funds managed by its affiliates (the "Apollo Funds") have entered into definitive agreements to acquire a majority stake in Reno De Medici S.p.A. ("RDM", or the "Company" or the "Issuer"), a leading producer of recycled cartonboard in Europe.
Apollo Funds will acquire approx. 67% equity ownership in RDM from the Company's top two shareholders, Cascades Inc. and Caisse de dépot et placement du Québec for EUR 1.45 per share (with no adjustments, save as further detailed below), representing a 24% premium to the 90-day volume weighted average share price. The closing of the transaction, which is subject to customary closing conditions as further detailed below, is expected to take place by Q3 2021. Upon closing, Apollo will launch a mandatory tender offer for the remaining shares, with the aim to de-list the Company.
RDM is the number one producer of coated recycled cartonboard in Italy, France and the Iberian Peninsula, and the second-largest producer in Europe. With 100% of products composed of recycled materials, RDM plays a central role in increasing sustainability and contributing to a circular economy by minimizing waste, emissions, and raw material and water usage. This year the RDM group acquired mills in Spain, just closed last week, and agreed to acquire mills in the Netherlands which, upon closing, will bring its operations to nine mills and five specialized cutting and sheeting centers across Europe and the US. Apollo expects that RDM group will continue to benefit from increasing shifts in consumer preferences and EU-wide regulations supporting the use of sustainable, recycled fibers.
"Already one of Europe's top leaders in recycled cartonboard, RDM is well positioned for continued growth as more companies replace plastics with sustainable packaging. We view RDM as a proven platform for inorganic growth and look forward to working with Michele and the management team as they scale the business for greater positive environmental impact," said Marc Becker, Senior Partner and Co-Lead of Apollo Impact. "As the inaugural investment led by the Apollo Impact platform, RDM reflects our strategy to find good businesses where we believe we can drive financial and impact performance to increase their beneficial effects on society and the planet."
"We are excited to work with Apollo through this next phase of growth for RDM. Over the last five years, our exceptional team has made significant progress in scaling our platform and optimizing our operations across Europe," said Michele Bianchi, CEO of RDM group. "Looking ahead, we are equally excited about Apollo's shared commitment to the circular economy of which we are both contributors and beneficiaries. We look forward to building on our ambitious sustainability goals to shape a better future for all our stakeholders."
Andrea Moneta, Apollo's Senior Advisor for Italy, added "RDM underscores the important role Italy is playing in building a more sustainable global economy, and Apollo's commitment to working with best-in-class Italian corporates, entrepreneurs, and management teams to support their long-term growth."