Private equity firm Clearlake Capital Group LP has signed a deal to buy Intertape Polymer Group Inc. in a deal valued at US$2.6-billion, including debt.
Under the agreement that will see IPG become a privately held company, Clearlake will pay $40.50 a share in cash, representing an 82-per-cent premium to its last closing price.
Intertape shares rose $17.02, or 76.4 per cent, to $39.30 in Tuesday afternoon trading on the Toronto Stock Exchange.
IPG chief executive Greg Yull says Clearlake will provide the operational and financial resources to accelerate the company’s acquisition strategy, as well as organic growth opportunities.
“We believe this transaction is a great next step in the evolution of our business as Clearlake has strong industry knowledge in the protective packaging and e-commerce ecosystems,” he said in a news release.
IPG chairman James Pantelidis said the board determined the transaction was in the best interests of the company and shareholders after evaluating alternatives.
Founded by Mr. Yull in 1981 and incorporated in Montreal in 1993, IPG makes a variety of products used for packaging, including tapes and films.
It has about 4,100 employees with operations in 34 locations, including 22 manufacturing facilities in North America, five in Asia and two in Europe.
Clearlake co-founder and managing partner Jose Feliciano and managing director Arta Tabaee added that the addition of Intertape to its portfolio supports its thesis that “long-term consumer trends favour providers focused on sustainability and innovation.”
The deal, which is subject to customary closing conditions, including receipt of shareholder, regulatory and court approvals, is expected to close in the third quarter. A shareholder meeting to approve the transaction is expected in May.
Analyst Walter Spracklin of RBC Dominion Securities said the agreement is positive for shareholders “as an all-cash deal speaks to the quality of the underlying business.”
In November the company revised its revenue forecasts for 2021, saying it expected $1.54-billion, up from a range of $1.42-billion to $1.5-billion predicted three months earlier.
The sale of Intertape comes more than a decade after it restructured operations, including closing and selling its last Ontario manufacturing facility in Brantford, Ont., nearly three years after a strike made the plant unprofitable. It previously closed two smaller facilities in Hawkesbury, Ont.
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