Silgan (SLGN) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands the global dispensing and specialty closures franchise, enhancing presence in personal care, food, and healthcare markets, and aligns with a decade-long strategy for high-margin, high-growth segments.

• Weener Plastics offers market-leading positions, innovative products, advanced manufacturing, and strong customer relationships, complementing the acquirer's portfolio.

• The deal enhances exposure to higher-growth end markets, increasing the segment's share of dispensing and specialty closures products.

• Weener's innovation pipeline and clean room capabilities provide new technology and growth opportunities, especially in healthcare.

• Cultural fit and operational similarities are emphasized, with management expected to remain post-acquisition.

Financial terms and conditions

• Enterprise value of €838 million, representing 8.7x LTM adjusted EBITDA and 7.2x post-synergy, with purchase price subject to adjustments.

• Weener generated €450 million in sales and €96 million adjusted EBITDA (21% margin) in the last 12 months.

• Transaction to be financed under existing credit agreement, cash on hand, and borrowings under a senior secured credit facility, with expected borrowing rates of 5%-6% in euros.

• Year-end 2024 net debt/EBITDA expected below 3.5x, with a target below 3x by end of 2025.

• Transaction expected to close in Q4 2024 and be accretive to adjusted EPS and free cash flow in 2025.

Synergies and expected cost savings

• Annual cost synergies of approximately €20 million anticipated within 18 months, mainly from procurement, supply chain, and operational improvements.

• Additional synergies from operational footprint and general operations, with minimal cash outlay expected to achieve them.

• Fully synergized EBITDA margin projected at 26%, above previous acquisitions and industry comps.

• Approximately 10% EPS accretion anticipated once fully integrated and synergies are achieved.