Metro Atlanta-based Mativ Holdings Inc. is set to sell its “engineered papers” division, which includes material used in the rolling and packaging of cigarettes, to a Singapore-based group for $620 million.
Mativ expects to clear $575 million from the proposed deal with Evergreen Hill Enterprise Pte. Ltd., a unit of Indonesia’s BMJ that bills itself as providing a “total solution” — everything but the tobacco — for cigarette packaging.
Mativ will use the proceeds to pay down a little over a third of its outstanding debt.
Mativ was formed in 2022 from the merger of Neenah Paper and Schweitzer-Maduit International, a global leader in the space with a longtime footprint in Georgia. It moved into combined office space in Alpharetta, pointing to $65 million in cost savings for a company that had grown to 7,500 employees with sales in 100 countries.
SWM remains a core brand in the division that Mativ is selling as it seeks to exit the tobacco sector and prepare for its next phase by reallocating capital and reducing leverage.
“While a solid business, EP’s concentration in the tobacco industry is not aligned with Mativ’s long-term ambition and presents a more attractive value proposition under new strategic ownership,” said Julie Schertell, CEO of Mativ, in a statement.
Engineered Papers was a part of Mativ’s Fiber Based Solutions division, which includes specialty and premium packaging, commercial print, digital transfer, consumer products and more.
The companies expect the transaction to close in the fourth quarter of this year after gaining regulatory approvals. They also must wait out a mandated labor consultation period in France, where SWM has traditionally had a strong presence.
Mativ simultaneously announced that it would reduce its annual dividend to one-fourth of its previous total, from $88 million ($1.60 per share) to $22 million ($0.40 per share) and buy back $30 million in shares.
Near-term, annual revenues are expected to drop to $2.2 billion.
The $620 million sale price is about 6.5 times the gross earnings of the unit, which posted annual revenues of $530 million in 2022.
