In Line with its Strategy, Cascades Announces the Monetization of its Controlling Interest in RDM Group

Rhea-AI Summary

Cascades Inc. announced its agreement to sell its 57.6% stake in Reno De Medici for €1.45 per share, totaling approximately €315.3 million (~CAN$461 million). This price represents a 24% premium over RDM's 90-day share average. The transaction aims to enhance Cascades' core North American operations, supporting strategic modernization and shareholder returns. Set for Q3 2021 completion, the sale concludes Cascades' 35-year presence in Europe, with Apollo Global Management acquiring RDM to drive future growth. Rothschild & Co acted as financial advisor for Cascades.

Positive

• Sale of 57.6% stake in Reno De Medici for approximately €315.3 million enhances liquidity.
• 24% premium over RDM's 90-day average share price reflects successful valuation.
• Proceeds will support strategic modernization initiatives and shareholder returns.

Negative

• Divestiture signals an exit from the European market, potentially reducing geographical diversification.

KINGSEY FALLS, QC, July 5, 2021 /PRNewswire/ - Cascades Inc. (TSX: CAS) (the "Company") is pleased to announce that it has entered into an agreement with an affiliate of funds managed by affiliates of Apollo Global Management, Inc. (NYSE: APO) (together with its consolidated subsidiaries, "Apollo") to sell its 57.6% equity interest in Reno De Medici S.p.A. (BIT: RM) ("Reno de Medici", or "RDM") for an all-cash price of €1.45 per share, corresponding to a total net cash consideration of approximately €315.3 million (approximately CAN$461 million). The purchase price is not subject to adjustment, except in case of potential leakages of value to the seller (such as, among others, dividends or returns of capital), provided that RDM's 2020 dividend that was paid to the shareholders in May 2021 will not be considered a leakage.

The selling price represents a 24% premium to RDM's 90-day volume weighted moving average share price, and a 6.9x multiple to RDM's last twelve months adjusted operating income before depreciation as of March 31, 2021. Upon closing of the recently announced acquisition of Eska Group, the RDM group operations will grow to nine mills and five specialized cutting and sheeting centers across Europe and the USA. 

The transaction is expected to be completed in the third quarter of 2021 and is subject to customary closing conditions, including required merger control approvals.

"The monetization of our RDM investment reflects our commitment to creating long-term value for the Company and our shareholders" stated Mario Plourde, President and Chief Executive Officer. "The timing of this divestiture allows Cascades to monetize the value generated by RDM's multi-year transformation initiatives, which have helped drive the significant increase in Reno de Medici's share price over the past year. Strategically, exiting our Boxboard Europe segment is aligned with our plan to focus on strengthening the competitive positioning of our core North American packaging and tissue papers business operations. To this end, proceeds from the divestiture will support ongoing strategic modernization initiatives and key projects and allow Cascades to strategically return capital to shareholders and proactively manage our debt profile."

"Today's announcement signals the end of our Company's successful 35-year operating history in Europe. While Cascades is turning a page to focus on North America, we are confident that the team at Apollo will be an ideal strategic partner to support RDM's future growth. We would like to thank Michele Bianchi and the Reno management team as well as all of the employees for the successful and positive partnership we have enjoyed with them over these many years," Mr. Plourde said in closing.

Rothschild & Co acted as financial advisor to Cascades in this transaction and Jones Day acted as legal advisor. Allen & Overy and Paul, Weiss, Rifkind, Wharton & Garrison acted as legal advisors for Apollo.

Cascades will hold a conference call on July 5, 2021, at 9:00 a.m. (ET) to discuss this strategic transaction. The call can be accessed by phone: 1-888-664-6383 (toll free) /1-416-764-8650 (international), or via the Company's website: www.cascades.com/en/investors.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs more than 11,700 women and men across a network of 85 facilities in North America and Europe. Driven by its participative management, half a century of experience in recycling, and continuous research and development efforts, Cascades continues to provide innovative products that customers have come to rely on, while contributing to the well-being of people, communities and the entire planet. Cascades' shares trade on the Toronto Stock Exchange under the ticker symbol CAS.

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SOURCE Cascades Inc.

FAQ

What is the significance of Cascades Inc. selling its stake in Reno De Medici?

Cascades Inc. selling its 57.6% stake in Reno De Medici allows it to enhance liquidity and focus on its core North American operations.

What is the purchase price for Reno De Medici shares?

Reno De Medici shares were sold for €1.45 each, totaling approximately €315.3 million.

How does the sale impact Cascades Inc.'s strategy?

The sale aligns with Cascades' strategy to strengthen its competitive position in North America and fund modernization initiatives.

When is the transaction expected to close?

The transaction is expected to be completed in the third quarter of 2021, pending customary closing conditions.

Who managed the sale for Cascades Inc.?

Rothschild & Co acted as the financial advisor for Cascades during this transaction.