Transcontinental enters deal to sell packaging business

Executive Summary

• Transcontinental Inc. has entered into a stock purchase agreement to sell its entire packaging sector to ProAmpac Holdings Inc. and its subsidiaries.
• The transaction carries an aggregate purchase price of approximately $2.10 billion (implying an enterprise value of ~$2.22 billion) and is subject to shareholder and regulatory approvals.
• Proceeds will be distributed to shareholders, with an expected cash distribution of approximately $20.00 per Class A and Class B share, alongside a reduction in stated capital.

Key Details

• Transaction Structure: Stock purchase agreement for all issued and outstanding shares of capital stock of entities carrying on the corporation's packaging sector.
• Counterparties: Seller is Transcontinental Inc.; Buyer is ProAmpac Holdings Inc. and certain subsidiaries.
• Purchase Price: Aggregate purchase price of approximately $2.10 billion, subject to customary adjustments for debt, cash, and net working capital.
• Enterprise Value: Approximately $2.22 billion, inclusive of assumed indebtedness and lease obligations under IFRS.
• Valuation Multiples:
  • ~8.7x LTM adjusted EBITDA (IFRS basis) as of July 27, 2025.
  • ~9.0x LTM adjusted EBITDA (pre-IFRS basis) as of July 27, 2025.
• Shareholder Distribution:
  • Expected cash distribution of ~$20.00 per Class A and Class B share.
  • Distribution mechanism includes a reduction of stated capital (~$7.00 per Class A share, < $1.00 per Class B share) and a cash dividend for the balance.
  • Capital reduction is subject to shareholder approval.
• Financial Impact on Remaining Business (12 months ended July 27, 2025):
  • Packaging Sector (Being Sold): Revenues ~$1.6 billion; Operating Earnings ~$157 million; Adjusted EBITDA ~$255 million.
  • Continuing Operations (Excluding Packaging): Revenues ~$1.2 billion; Operating Earnings ~$119 million; Adjusted EBITDA ~$215 million.
  • Total Corporation (Pre-Transaction): Revenues $2.8 billion (FY ended Oct 27, 2024); Adjusted EBITDA ~$470 million; Operating Earnings ~$276 million.
• Post-Transaction Metrics:
  • Pro forma net indebtedness ratio expected to be ~1.7x.
  • Focus on deleveraging and strong liquidity position.
• Closing Conditions: Subject to shareholder approval (special meeting required), regulatory approvals, and customary closing conditions.
• Timeline:
  • Management proxy circular expected to be mailed on or before Dec. 19, 2025.
  • Special meeting of shareholders expected by end of January 2026.
  • Expected closing in the first quarter of calendar year 2026.
• Voting Support: Capinabel Inc. (largest shareholder, ~65.96% of votes) has entered into a voting agreement to vote in favor. Board unanimously recommends approval.
• Advisers:
  • Financial Advisers: CIBC Capital Markets and RBC Capital Markets.
  • Legal Counsel: Stikeman Elliott LLP and Morgan Lewis & Bockius LLP.
• Fairness Opinions: CIBC and RBC provided fairness opinions to the board regarding the consideration.

Notable Quotes

• Isabelle Marcoux, Executive Chair: "This transaction delivers immediate and significant value to our shareholders... In this period of industry consolidation, we are maximizing shareholder value by acting decisively and from a position of strength."
• Thomas Morin, President and CEO: "This transaction will allow us to concentrate our resources on our retail services and printing and educational publishing activities."
• Greg Tucker, CEO of ProAmpac: "This acquisition is a transformative milestone for ProAmpac and TC Transcontinental Packaging. Through TC Transcontinental Packaging, ProAmpac is broadening its end-market focus to include protein, dairy and medical segments, and expanding its geographic presence."