Silgan Holdings Inc M&A announcement

Please go ahead. Thank you, and good morning, everyone.

We appreciate you joining us on short notice today to discuss a transformative strategic portfolio announcement for Silgan Holdings. Joining me on the call today are Adam Greenlee, President and CEO, and Shawn Fabry, EVP and CFO. Before we begin the call, we would like to make it clear that certain statements made on this conference call may be forward-looking statements. These forward-looking statements are based upon management's expectations and beliefs concerning future events impacting the company, and therefore involve a number of uncertainties and risks, including but not limited to those described in the company's annual report on Form 10-K for 2025 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements.

In addition, commentary on today's call may contain references to certain non-GAAP financial metrics, including adjusted EBIT and adjusted EBITDA. Reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics, can be found in today's presentation, which can be found in the investor relations section of our website at silganholdings.com. With that, I'll turn the call over to Adam.

Thank you, Alex, and good morning, everyone. Today's announcement represents a transformative step in Silgan's portfolio evolution and reflects the disciplined value creation framework that has guided our company for decades. The combination of our metal packaging business and Trivium creates a best-in-class global platform, provides synergies, and establishes a clear path to separation. At the same time, our funding approach will increase flexibility for our faster-growing dispensing business, providing multiple pathways to accelerate shareholder value creation. First, we will further strengthen our global metal package business by investing in our markets and product offerings while generating a substantial synergy opportunity. Second, we unlock approximately $2.3 billion of cash for Silgan while retaining control and future upside created by the combined metal business. Third, we sharpen the strategic focus of both businesses with clearly defined operating priorities and capital structures aligned by a common value creation agenda.

Turning to slide three, as most of you have seen before, our strategy has been consistent since day one and is focused on building and enhancing our positions in the markets we serve by meeting the unique needs of our customers and being the best at what we do. Our strategy centers on competitively advantaged businesses with strong free cash flow generation, and we deploy that cash flow in a disciplined, returns-based capital allocation process proven to create value for shareholders over the long term. This model provides flexibility to invest organically, execute targeted and disciplined acquisitions, or return cash directly to shareholders. The transaction we are announcing today applies the same strategy that is at the very core of what we do at Silgan. On slide four, you'll see that since 1987, we have completed 41 acquisitions, allocating approximately 45% of total cash deployed to M&A activities.

Through our disciplined and balanced approach to capital allocation, we have delivered attractive shareholder returns, particularly through the realization of meaningful synergies generated through M&A, as well as organic investments, share repurchases, and dividends. Today, our metal containers business provides stability and strong free cash flow to our portfolio, while our Dispensing Solutions and custom containers businesses provide attractive margins and exposure to premium specialty packaging products in faster-growing end markets. Together, these businesses generated approximately $6.7 billion of sales and $976 million of adjusted EBITDA. Turning to today's announcement on slide five, Silgan has agreed to acquire Trivium Packaging in an all-cash transaction valued at approximately $3.4 billion. Trivium is a global provider of recyclable metal packaging products and a strong strategic fit with Silgan's food and beverage packaging businesses.

As part of this acquisition, we intend to combine Silgan metal containers and food and beverage flat-cap closures businesses with Trivium to form Silgan MCC. This transaction is structured without requiring meaningful incremental capital on behalf of Silgan shareholders and will be leverage neutral on a consolidated basis. To achieve this, funds affiliated with American Industrial Partners, or AIP, will contribute approximately $1 billion of cash and will own 40% of Silgan MCC common equity. Silgan MCC will be further capitalized with third-party debt financing, creating a distinct balance sheet intentionally designed to operate the metal business efficiently. Silgan will retain a 60% controlling interest and report the entirety of Silgan MCC as part of our consolidated financial results. At closing, Silgan will receive approximately $2.3 billion of cash proceeds.

Our remaining wholly owned Dispensing Solutions and custom containers businesses will be combined to form a newly named Silgan Dispensing Solutions segment. Turning to slide six, it is important to discuss why we are pursuing this transaction. On the metal packaging side, we are bringing together two highly complementary businesses with expanded scale, broader capabilities, and greater geographic reach. The combination strengthens our value proposition to customers while creating an attractive business with predictable earnings and strong cash flow. At the same time, Dispensing Solutions becomes a more focused growth platform. With additional flexibility, we can invest behind innovation, customer partnerships, attractive end markets, and disciplined acquisition opportunities. Another key element of the transaction is the synergy opportunity. Through a rigorous bottom-up diligence process, we have identified $225 million of expected synergies within Silgan MCC.

Importantly, we believe the complementary nature of these businesses creates a unique synergy opportunity that only Silgan is positioned to capture. The structure also creates meaningful financial flexibility. We retain control and future upside in Silgan MCC, while increasing our capacity to invest behind growth opportunities and Dispensing Solutions, and pursue additional value-creating opportunities over time. As I conclude this slide, let me address why now is the right moment for this opportunity. The combination comes at a point when customers increasingly value global scale, supply reliability, sustainability, and operational excellence. By bringing together two highly complementary businesses, we believe we are better positioned to meet those needs and create value in a way neither company could achieve independently. With that, I will now turn it over to Shawn to review the transaction.

Thank you, Adam. Turning to slides 7 and 8, the combination announced today values Silgan's existing metal containers and closures business at approximately 8.1 times LTM EBITDA, and Trivium is being acquired at approximately 7.1 times LTM EBITDA, or 4.8 times including the expected synergies of $225 million. The acquisition of Trivium was funded through fully committed debt financing at Silgan MCC and approximately $1 billion of cash investment by AIP. At closing, Silgan MCC will be funded with net debt of approximately $4.6 billion, representing 4 times net leverage, inclusive of $225 million of expected synergies. As Adam mentioned, Silgan MCC will have an independent capital structure and remain a fully consolidated subsidiary of Silgan.

Following the transaction, Dispensing Solutions will maintain an independent balance sheet with initial pro forma net leverage of approximately 1.8 times, providing meaningful capacity to pursue attractive organic investments and disciplined acquisitions in our higher growth specialty packaging businesses. On a consolidated basis, the transaction is expected to be leverage neutral to Silgan. Turning to slide 9, the Silgan MCC structure is fundamental to the transaction's value proposition, and AIP will be an important partner in executing our strategy. The firm's experience investing in and supporting manufacturing-focused industrial businesses complements Silgan's packaging expertise. Most importantly, the partnership creates clear economic and strategic alignment, and we benefit from improving Silgan MCC's performance, generating cash, and building long-term value. Our shared focus is clear. Close the transaction, integrate the businesses, deliver the synergies, and build a stronger global metal packaging business.

Turning to slide 10, our current expectation is to achieve approximately $75 million of run rate synergies in year 1, $150 million in year 2, and $225 million in year 3. The opportunity is based on detailed bottom-up assessment of operations, procurement, and SG&A. Following extensive diligence, we are highly confident in both the magnitude and timing of the synergy opportunity. As a result of these expected synergies, the implied acquisition multiple for Trivium decreases from approximately 7.1 times to 4.8 times adjusted EBITDA, creating a highly compelling opportunity to build an even stronger metal packaging business. Now, back over to Adam to talk more about the value creation opportunity.

Thanks, Shawn, and turning to slide 11. The structure unlocks meaningful scale and financial benefits today, while preserving flexibility regarding how we position the portfolio over time. On a pro forma basis, Silgan will generate approximately $10 billion of sales and $1.7 billion of adjusted EBITDA, compared with approximately $7 billion of sales and approximately $1 billion of adjusted EBITDA for our current business. Inclusive of the full $225 million of expected synergies, the transaction is expected to drive at least 15% accretion to adjusted EPS and free cash flow, underscoring the financial strength of the transaction. The agreement also establishes a pathway for Silgan MCC to become an independent public company through a tax-free distribution, and the timing will be governed by the progress of integration, synergy realization, business readiness, and market conditions.