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US' SWM and Neenah merge to form $3 bn specialty materials company

31 Mar '22

2 min read

Pic: Schweitzer-Mauduit International

US-based Schweitzer-Mauduit International, Inc. (SWM) and Neenah, Inc., two manufacturers of specialty materials, have entered into a definitive agreement to combine in an all-stock merger of equals with combined revenues of approximately $3 billion. The combination is expected to accelerate long-term revenue growth, with numerous opportunities to cross-sell the extensive suite of specialty materials.

Moreover, this merger will leverage each company’s deep customer relationships, combined technology portfolio, and innovation capabilities. In addition, with operations spanning four continents, the combination will create a stronger presence to better serve customers both globally and regionally, with significant opportunities to increase penetration in several geographies, the two companies stated in a joint media release.

The transaction is expected to achieve at least $65 million in annual run-rate cost synergies within 24-36 months post closure. Key cost savings include organisational optimisation, procurement and other supply chain efficiencies, and redundant public company costs. Furthermore, following the closing of the transaction, SWM shareholders will own approximately 58 per cent of the combined company, and Neenah shareholders will own approximately 42 per cent of the combined company, in each case, on a fully diluted basis, the release added.

The combined company is projected to have approximately $450 million of pro-forma adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) (including synergies) and margins of more than 15 per cent in highly specialised, defensible categories. The transaction is also expected to increase the combined company’s ability to generate cash, providing financial stability and flexibility. The combined company intends to uphold Neenah and SWM’s track records of prioritised uses of cash, including returning capital to shareholders. As a larger, well-capitalised company, the combined entity also expects to benefit from greater access to capital markets, opportunities for lower cost of capital, and long-term strategic optionality.

The new board will consist of nine directors, five of whom will be from the SWM board and four of whom will be from the Neenah board, including Julie Schertell. John D. Rogers, non-executive chairman of the SWM board, will serve as non-executive chair of the combined company’s board of directors, the joint media release added.

The merger is expected to close in the second half of 2022, subject to Neenah and SWM shareholder approval, regulatory approvals, and other customary closing conditions.

Fibre2Fashion News Desk (SF)