Crown Holdings, Inc. Announces Sale Of Its European Tinplate Business To KPS Capital Partners, LP

Rhea-AI Summary

Crown Holdings (NYSE: CCK) announced the sale of its European Tinplate business to KPS Capital Partners for approximately €1.9 billion. This deal allows Crown to retain a 20% ownership stake in the business, which had 2020 revenues of €1.9 billion and an estimated EBITDA of €220 million. The sale is expected to close in Q3 2021, subject to regulatory approvals. Crown plans to use the proceeds to reduce debt and repurchase shares. The transaction aims to enhance Crown's financial profile, with a pro forma adjusted net leverage ratio forecasted to improve from 3.9x to 2.9x by year-end 2021.

Positive

• Crown to receive approximately €1.9 billion from the sale, enhancing financial flexibility.
• Retention of a 20% stake in the European Tinplate business allows for continued upside potential.
• Improvement in estimated pro forma adjusted net leverage ratio from 3.9x to 2.9x expected by year-end 2021.

Negative

• None.

YARDLEY, Pa., April 8, 2021 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) (Crown) announced today that it has entered into a definitive agreement to sell its European Tinplate business to KPS Capital Partners, LP.  Crown will receive pre-tax proceeds of approximately €1.9 billion from the transaction and will retain a 20% ownership stake in the business.  The European Tinplate business comprises 44 manufacturing facilities in 17 countries in Europe, the Middle East and Africa which produce food cans and ends, aerosol cans, metal closures and promotional packaging for various consumer brands.  In 2020, the business generated €1.9 billion in revenue and approximately €220 million in estimated standalone EBITDA and had approximately 6,300 employees.

"We are very pleased that the European Tinplate business will have a strong owner in KPS Capital Partners to support future profitable growth and innovation initiatives.  European customers and consumers alike have long embraced metal packaging, valuing the premium product protection and flavor preservation that it offers.  The infinitely recyclable food can is unrivaled from a sustainability standpoint, helping eliminate over one billion liters a year in food waste.  We are excited to retain a minority stake in the business alongside KPS as Crown shareholders will benefit from the KPS team and its track record of owning manufacturing companies and creating tremendous value," commented Timothy J. Donahue, President and Chief Executive Officer.

Michael Psaros, Co-Founder and Co-Managing Partner of KPS, said, "We are excited to acquire one of the largest metal packaging businesses in Europe.  The size and scale of the business, the breadth of its products and its critical food safety technology and process disciplines developed over decades, coupled with growing end-markets, are the foundation of a tremendous investment platform.  We thank Mr. Donahue and Crown for their confidence in KPS and trust in our stewardship of the extraordinary business they have built."

Crown expects to use the net proceeds, after closing working capital adjustments, taxes and other transaction related costs, to further reduce debt, fund capital projects and repurchase shares over time under its recent $1.5 billion authorization dated February 25, 2021.  For illustrative purposes only, and assuming all net proceeds of the transaction were used to reduce debt, the Company's estimated pro forma adjusted net leverage ratio at the end of 2021 (excluding all 2021 EBITDA related to the European Tinplate business) would be 2.9x compared to the 3.9x at December 31, 2020.

The sale of the European Tinplate business is expected to close during the third quarter of 2021 and is subject to certain regulatory approvals and customary closing conditions.

Evercore acted as exclusive financial advisor to Crown.

As previously announced, the Company will release its earnings for the first quarter ended March 31, 2021 after the close of trading on the New York Stock Exchange on Monday, April 19, 2021.  The Company will hold a conference call to discuss those results at 9:00 a.m. (EDT) on Tuesday, April 20, 2021.  The Company will have no further comment regarding the sale of the European Tinplate business beyond this news release until its earnings call on April 20, 2021.

About Crown Holdings, Inc.
Crown Holdings, Inc., through its subsidiaries, is a leading global supplier of rigid packaging products to consumer marketing companies, as well as transit and protective packaging products, equipment and services to a broad range of end markets.  World headquarters are located in Yardley, Pennsylvania.  For more information, visit www.crowncork.com.

About KPS Capital Partners
KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with over $12.3 billion of assets under management (as of December 31, 2020).  For nearly three decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer healthcare and luxury products, automotive parts, capital equipment and general manufacturing.  KPS creates value for its investors by working constructively with talented management teams to make businesses better, and generates investment returns by structurally improving the strategic position, competitiveness and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds' portfolio companies have aggregate annual revenues of approximately $10.6 billion, operate 159 manufacturing facilities in 22 countries, and have approximately 34,000 employees, directly and through joint ventures worldwide.

Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release consists of forward-looking statements.  These forward-looking statements involve a number of risks, uncertainties and other factors, including the Company's ability to close the transaction in the third quarter of 2021, or at all; whether the transaction will be approved by the competition authorities in relevant jurisdictions; the number of its shares the Company may repurchase and the price at which those shares may be repurchased; the future value, if any, to Crown shareholders of the 20% retained ownership interest in the business; and the impact of the transaction on the Company's earnings and cash flow. Important factors that could cause the statements made in this press release or the actual results of operations or financial condition of Crown to differ are discussed under the caption "Forward Looking Statements" in Crown's Form 10-K Annual Report for the year ended December 31, 2020 and in subsequent filings made prior to or after the date hereof.  Crown does not intend to review or revise any particular forward-looking statement in light of future events.

For more information, contact:
Thomas A. Kelly, Senior Vice President and Chief Financial Officer, (215) 698-5341
Thomas T. Fischer, Vice President, Investor Relations and Corporate Affairs, (215) 552-3720

View original content:http://www.prnewswire.com/news-releases/crown-holdings-inc-announces-sale-of-its-european-tinplate-business-to-kps-capital-partners-lp-301265447.html

SOURCE Crown Holdings, Inc.

FAQ

What is the value of Crown Holdings' sale of the European Tinplate business?

Crown Holdings announced it will receive approximately €1.9 billion from the sale.

When is the sale of Crown Holdings' European Tinplate business expected to close?

The sale is expected to close during the third quarter of 2021, subject to regulatory approvals.

What percentage of the European Tinplate business will Crown Holdings retain?

Crown Holdings will retain a 20% ownership stake in the European Tinplate business after the sale.

How will Crown Holdings use the proceeds from the sale of its European Tinplate business?

Crown Holdings plans to use the proceeds to reduce debt and repurchase shares.

What was the revenue of Crown's European Tinplate business in 2020?

The European Tinplate business generated €1.9 billion in revenue in 2020.