Based in Singapore, Essentra Filters has 12 sites across nine countries, including two innovation centres, offering a flexible infrastructure positioned to cater to the tobacco sector
Essentra to divest filters business to Frank Acquisition Four for £262m. (Credit: PublicDomainPictures from Pixabay)
UK-based essential components and solutions provider Essentra has announced the sale of Essentra Filter Holdings to Frank Acquisition Four, a subsidiary of Centaury Management, for an enterprise value of about £262.1m.
Based in Singapore, Essentra Filters has 12 sites across nine nations, including two innovation centres, offering a flexible infrastructure positioned to cater to the tobacco sector.
The consideration includes an initial consideration of £200m due on completion (on a cash-free, debt-free basis and subject to customary adjustments as set out below) and up to £20m deferred earn-out consideration after completion.
The transaction, subject to approval by Essentra’s shareholders, is expected to complete before 31 January 2023.
Essentra said its board of directors aims to use the company’s debt position by offering to prepay a part of US private placement (USPP) notes issued under its 2021 note purchase agreement and to make a small contribution towards the company’s defined benefit pension schemes.
Upon closing of the transaction, Essentra’s board aims to return about £150m of the residual net transaction proceeds from the disposals of Filters and Packaging to shareholders through a special dividend.
Essentra CEO Paul Forman said: “The strategic review of Filters was launched in October 2021 and has built on the significant progress the division has made since 2017 when announcing its strategy for future growth.
“The business is delivering on all of the strategic “game changers” and has attractive long-term growth prospects. I am confident that Filters will continue to make excellent progress under its new ownership.
“The sale of Filters marks the final step of our journey to become a pure play components business. Essentra has a bright future as a leading global manufacturer and distributor of components with a clear strategy and significant opportunities to accelerate growth and expand market share.
“This transaction strengthens Essentra’s balance sheet and enables the Group to return a meaningful portion of the proceeds to shareholders whilst maintaining the flexibility to invest in organic and inorganic growth.”
Essentra also completed the sale of ESNT Packaging & Securing Solutions and Essentra Packaging US and their subsidiaries to Mayr-Melnhof Group.