In a deal it called highly complementary to its own activities, Toronto-based CCL Industries Inc. has agreed to acquire the UK’s Innovia Group for an estimated $1.13 billion enterprise value. CCL is buying Innovia debt free and net of cash from a consortium of UK-based private equity investors managed by The Smithfield Group LLP. The transaction is subject to regulatory and other change of control approvals and customary completion procedures with closing expected by the end of the first quarter, 2017.
The transaction follows a highly successful period for Innovia, a leading global specialty manufacturer of Bi-axially Oriented Polypropylene (BOPP) films and surface coatings for the label, security & specialty packaging markets. As part of a strategic shift in focus, the company divested its legacy cellophane business earlier this year, to concentrate on high value add and differentiated films with world leading technology. To that end, it substantially enhanced the capabilities and performance of both its film and banknote businesses, making significant growth investments over the last 3 years, including a new facility to produce polymer banknote substrate in Cumbria.
For CCL, the acquisition represents a number of significant opportunities. According to the company, polymer banknote usage (3% penetration today) is on the brink of disruptive break through versus traditional banknotes. The technology deployed by Innovia parallels CCL’s for large scale label applications. CCL further pointed to the fact that CCL Label & Innovia already jointly develop proprietary, specialized applications for labels and other packaging products at key global end use customers. CCL also called
Innovia’s R&D facilities “the best we have ever seen in our industry bringing leading edge materials science capability to CCL Label, CCL Design, Checkpoint & Avery.”
CCL is already the world’s largest specialty label business, employing more than 20,000 people and operating from 156 production facilities across 35 countries on 6 continents. CCL has a complementary presence in the markets in which Innovia operates, with capabilities in security printing, polymer extrusion and surface engineering that are deployed across all business segments. The acquisition of Innovia is expected to make CCL the world leader in the fast-growing polymer banknote market.