Matthews International Corporation (NASDAQ GSM: MATW) has announced the sale of its interest in SGK Brand Solutions ("SGK") to a newly formed entity created by affiliates of SGS & Co ("SGS"). Under the terms of the agreement, Matthews will receive a total upfront consideration of $350 million, which includes $250 million in cash at closing, $50 million of preferred equity in the new entity, and the retention of approximately $50 million in trade receivables.
Matthews will also receive a 40% interest in the common equity of the new entity, which has an initial enterprise value of approximately $900 million, representing an adjusted EBITDA multiple of 9x on a trailing-twelve-month basis. The new entity is projected to realize over $50 million in annual run rate cost synergies over a 30-month expected integration period.
The immediate cash proceeds from the transaction of approximately $250 million will be used predominantly for debt repayment. Following the closing of the transaction, Matthews will record its investment and its portion of the income of the new entity under the equity basis of accounting and will no longer reflect full consolidation of the SGK business in its financial statements.
Gary R. Kohl, current President of SGK, will lead the new entity as CEO, and Matthew T. Gresge, the current CEO of SGS, will become the Executive Chairman of the board of the new company, working closely with Mr. Kohl to lead the integration of the newly combined businesses.
The transaction, subject to customary closing conditions, including regulatory approvals, is expected to be completed in mid-2025.
In connection with the company’s 2025 annual meeting, Matthews has filed a definitive proxy statement and other documents, including a white proxy card, with the U.S. Securities and Exchange Commission ("SEC") and has commenced mailing to the shareholders of record entitled to vote at the 2025 annual meeting.
Matthews International Corporation is a global provider of memorialization products, industrial technologies, and brand solutions with over 11,000 employees in more than 30 countries on six continents.
The company has enlisted J.P. Morgan Securities LLC as its financial advisor, K&L Gates as lead transaction counsel, and Covington & Burling LLP as antitrust counsel on the transaction. Orrick, Herrington & Sutcliffe is serving as legal counsel to SGS on the transaction.
As Matthews continues to evaluate strategic alternatives for its portfolio of businesses, this sale is part of the company's deliberate process to maximize the value of its diversified business units, moving towards a more streamlined business structure that can be better valued by the public equity markets.
The story is still unfolding, and we will continue to monitor Matthews International Corporation's journey as it focuses on creating increased value for its shareholders. The market has reacted to these announcements by moving the company's shares 14.7% to a price of $31.07. Check out the company's full 8-K submission here.
