UK- UK-based contract manufacturer Essentra has sold its filters unit, successfully completing the strategic reviews of its Filters and Packaging divisions and has appointed a new CEO.
In a statement, the company said that in line with the review, it has disposed Essentra Filter Holdings to Frank Acquisition Four.
The top holding company of Frank Acquisition Four is Centaury Management, which is owned and controlled by the investment office of the Markus family.
The consideration is comprised of approximately £200 million initial consideration due on completion, on a cash-free, debt-free basis and subject to customary adjustments, and up to £20 million deferred earn-out consideration following completion.
The transaction values the Filters business at an enterprise value of approximately £262.1 million, including 100% consolidation of certain joint ventures.
The deal is expected to be complete no later than 31 January 2023 and the conditions that the transaction is subject to include approval by Essentra’s shareholders.
Essentra’s board intends to use the proceeds to reduce the company’s debt position by offering to prepay a portion of US private placement notes (USPP) issued under its 2021 note purchase agreement and to make a small contribution to Essentra’s defined benefit pension schemes.
Upon completion of the deal, the board intends to return approximately £150 million of the residual net transaction proceeds from the disposals of Filters and Packaging to shareholders via a special dividend.
The transaction will further strengthen the group’s balance sheet and, after accounting for the repayment of USPP debt and special dividend, the board’s intention is for the group to have net financial leverage of approximately 0x.
This, it said, will provide Essentra Components with the flexibility to pursue value-creating organic and inorganic opportunities, including future bolt-on acquisitions.
For the year ended 31 December 2021, Filters delivered an adjusted operating profit of £28.2 million.
Meanwhile, the company has also successfully closed the sale of its packaging business to Austrian carton packaging supplier Mayr-Melnhof Group. A deal that was first announced in June.
Essentra appoints new CEO
Following the close of sales and reviews, Essentra’s CEO Paul Forman has decided to step down from his role at the end of the current financial year on 31 December 2022.
Forman, who joined the business in 2017, will be succeeded by Scott Fawcett, currently the Managing Director of Essentra’s Components division. Fawcett will join the board on 1 January 2023.
“Following a thorough review, the Nominations Committee unanimously recommended to the board that Scott be appointed as the company’s new chief executive,” said Forman.
“Scott has extensive knowledge and experience of the Components business and a successful track record of developing and expanding the division both organically and through acquisition.
Forman will work closely with Fawcett and the board to ensure a smooth transition and support the transition to a pure-play components business.
“I look forward to continuing to work with Scott as the company embarks on the new phase of its journey,” concluded Forman.
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