CCL Industries to Acquire Checkpoint Systems for US$10.15 per Share
• Checkpoint shareholders to receive US$10.15 per share in cash
• Transaction value of $556 million1 including the assumption of $44 million of net cash
• Up to $40 million in highly realizable synergies
• Meaningful earnings accretion
CCL Industries Inc. (TSX: CCL.A) (TSX: CCL.B) ("CCL"), a world leader in specialty label and packaging solutions for global corporations, small businesses and consumers, announced today that it has entered into a definitive merger agreement whereby CCL will acquire Checkpoint Systems, Inc. (NYSE: CKP) ("Checkpoint") for US$10.15 per share in an all-cash transaction valued at approximately $556 million, including net cash. The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in mid-2016
The US$10.15 per share in cash represents a premium of approximately 29% to the closing price on March 1, 2016, the last trading day prior to the signing of the definitive merger agreement. Geoffrey T. Martin, President and Chief Executive Officer of CCL, said, "We have admired Checkpoint for many years as they built a unique, leading global position providing technology-driven label solutions to the retail & apparel industry. We are very pleased to welcome their deeply experienced people to CCL where they will continue to focus on this important industry for emerging 'smart label' technologies."
The transaction represents a compelling and unique opportunity for CCL to enhance breadth and scale, while creating an opportunity to realize meaningful synergies, and earnings accretion as follows:
• Leading technology-driven label solutions provider to the retail and apparel sector
• Long-standing, blue-chip customer base of top global retailers and apparel brands
• Attractive 'smart label' product portfolio including radio-frequency identification ("RFID") solutions
• Global sales footprint spanning 29 countries serving all major retail markets
• Expands CCL's international operating platform, especially in Asia
• Identified annual synergies of up to $40 million
• Asset-light business model and improved working capital efficiency could accumulate significant free cash flow to drive rapid de-leveraging
• Meaningful and immediate earnings accretion
CCL intends to finance the transaction entirely with its existing US$1.2 billion revolving syndicated credit facility.
To achieve the targeted synergies, management estimates that non-recurring costs of $40 million will be incurred between closing and the end of 2018. The transaction will be subject to Checkpoint shareholder approval at a special shareholder meeting expected to take place in the second quarter of 2016. Closing of the transaction is subject to customary conditions, including receipt of relevant regulatory approvals, and is expected to occur in mid-2016, subject to approval of Checkpoint's shareholders.Upon the closing of the transaction, Checkpoint will be reported as a new operating segment of CCL.