SYDNEY: Orora Limited has entered into a binding agreement to sell Orora Packaging Solutions (OPS) to Veritiv Corporation, an investee company of Clayton, Dubilier & Rice, LLC (CD&R) for an enterprise value of A$1.775 billion (US$1.2 billion) on a cash and debt-free basis.

Veritiv’s offer fully values OPS and implies approximately 9.9x FY24A cash EBITDA, a premium to Orora’s trading multiple and relevant comparable transactions. The Transaction is expected to result in net cash proceeds of approximately A$1.687 billion after tax, transaction costs and purchase price adjustments.

A strategic review of OPS was undertaken with the objective of unlocking value for shareholders. The sale of Orora Packaging Solutions to Veritiv Corporation concludes a robust process spanning many months, and transforms Orora into a focused beverage packaging business, with market-leading positions and a defensive growth profile across beverage substrates and end-markets; and leaves Orora with a strong balance sheet, providing flexibility to pursue value accretive organic growth opportunities, including additional Cans expansion projects.

Orora intends to bring forward A$130 million of capital investment to further expand its Cans capacity in Rocklea, Queensland. The Rocklea expansion, in combination with recent and ongoing projects, will increase Cans capacity by more than 30%.

Upon completion of the transaction, Orora’s priorities will be to reduce debt and invest in an organic cans capacity expansion in Rocklea, Queensland. 

Orora’s intention is to distribute surplus proceeds from the Transaction to shareholders over time in a tax efficient manner to deliver a balance sheet consistent with a global beverage packaging business. The form and timing of shareholder distributions will be communicated in due course.

Orora’s Managing Director & CEO, Brian Lowe said: “Today’s announcement marks a new era for Orora as well as the OPS business as it transitions to Veritiv ownership. Veritiv’s interest in acquiring OPS provided us with an opportunity to realise an attractive valuation for shareholders and accelerate our strategy of becoming a specialty value-added beverage packaging player.

This leaves Orora with a strong balance sheet, allowing the company to grow our beverage packaging businesses, including further investment in high returning projects such as the expansion of our Rocklea cans facility in Queensland.

The sale is the culmination of a robust process and months of disciplined focus from our team to deliver a compelling outcome for Orora’s shareholders. We are extremely proud of the way the OPS business has grown and the value it has delivered whilst being part of the Orora Group. Veritiv’s offer is an exciting opportunity for the OPS team to join an industry leader in the North American packaging distribution market, with differentiated capabilities.”