Berry Plastics To Acquire AEP Industries In $765 Mln Deal

(RTTNews) - Berry Plastics Group, Inc. (BERY) and AEP Industries Inc. (AEPI) Thursday announced a definitive merger agreement under which Berry will acquire AEP in a cash and stock transaction worth $765 million, including AEP's net debt.

The deal is expected to be accretive to Berry's adjusted net income and adjusted free cash flow by more than 10 percent, after expected synergies. On a pro forma basis, Berry's four quarters ended June 2016 adjusted free cash flow would increase by approximately $85 million to $560 million. The transaction will be deleveraging to Berry's balance sheet after synergies.

As per the agreement, each AEP shareholder can elect to receive either $110 in cash or 2.5011 shares of Berry common stock per AEP share in the transaction, subject to an overall 50/50 proration to ensure that 50 percent of the total outstanding AEP shares are exchanged for the cash consideration. Upon closing, AEP shareholders will own approximately 5 percent of Berry on a fully diluted basis.

Based on Wednesday's closing price of Berry's stock, the blended value of the merger consideration represented $109.12 per AEP share.

Montvale, New Jersey based AEP is a leading manufacturer of flexible plastic packaging films in North America. It operates 14 manufacturing facilities in the United States and Canada and has approximately 2,600 employees.

Jon Rich, chairman and CEO of Berry Plastics said, "AEP, together with Berry's Engineered Materials Division, creates an impressive packaging film producer serving the North American market. This unique combination offers the opportunity for significant value creation for Berry and AEP shareholders alike, as we realize procurement and operating cost savings across the two organizations."

Berry expects to realize cost synergies of $50 million or more annually and to realize these cost savings through procurement initiatives, operational improvements, sharing of best practices, improved asset utilization, and logistics optimization across the combined plant network.

The transaction is expected to be completed in the December 2016 quarter.