Dive Brief:
- Berry Global is selling its specialty tapes business for $540 million to private equity firm Nautic Partners. It’s part of Berry’s strategy under CEO Kevin Kwilinski to narrow its focus on consumer packaging.
- Nautic described Berry’s tapes business as a leading manufacturer of pressure-sensitive tapes and adhesives, with more than 1,500 offerings and as many customers. According to the firm, the tapes business has operations in Kentucky, New York and Rhode Island, with customers in HVAC, industrial, building and construction and other specialty industries.
- The late-Monday announcement follows the spinoff this month of Berry’s Health, Hygiene and Specialties Global Nonwovens and Films business, as well as the news that Berry will be acquired by Amcor in a deal valued at $8.4 billion. The tapes deal is expected to close by the first quarter of 2025; the Amcor deal is projected to close in mid-2025.
Dive Insight:
Since taking the helm at Berry in October 2023, Kwilinski has been vocal about streamlining the company’s focus. On Monday, Kwilinski said the tapes sale “further supports these efforts and the continued focus on our high-growth consumer portfolio.”
Earlier this year, he said the company had divested its Strata and Promens Vehicles businesses within its Consumer Packaging International segment, netting $47 million in total proceeds. He teased more to come, estimating in May that divestitures over the next year could result in at least $2 billion in cash proceeds.
The strategy with divestitures was to get at least 70% of Berry’s volumes to have a consumer products focus. “I am absolutely committed to getting this portfolio right as fast as we can so that we can be very focused on growing our core consumer business,” Kwilinski said in May.
The tapes business appealed to Providence, Rhode Island-based private equity firm Nautic Partners, whose portfolio is partly focused on industrials. Its companies include polymer compounding business Aurora Material Solutions. Sean Wieland, managing director at Nautic, said Berry’s tapes business “has significant runway to grow.”
Private equity has played a role in numerous transactions across the packaging industry this year.
Berry expects to use the approximately $400 million in proceeds from the tapes sale to pay down debt. Berry anticipates the two recent sales together generated $1.3 billion. The company reported its pro forma net debt following the two deals was $5.9 billion as of Sept. 30, with net leverage of 3.5x. It listed pro forma revenue at $9.7 billion.
Berry reported that selling the tapes business “further reinforces the strategic rationale” for its combination with Amcor “and has no material impact on the financial profile of the combined entity.”
Following the Amcor-Berry deal announcement last week, Amcor CEO Peter Konieczny was asked about potential divestitures; he said there’s “very little overlap.” He also said that there could be “an opportunity to shed businesses” in the future.
Michael Roxland, senior paper and packaging analyst at Truist Securities, said in a memo late Monday following the tapes sale announcement that the move is “consistent with [Berry’s] strategy to minimize exposure to more cyclical industrial end-markets and reorient the portfolio to higher-growth consumer end-markets.”
