Transcontinental Inc. enters into Agreement to Sell its Packaging Business

Executive Summary

• TC Transcontinental entered a Stock Purchase Agreement to sell its entire Packaging sector to ProAmpac for an enterprise value of ~C$2.22 billion (≈US$1.61 billion).
• The transaction includes an expected cash distribution of approximately C$20.00 per share to shareholders, comprising a capital reduction and cash dividend.
• Subject to shareholder and regulatory approvals, the deal is slated to close in Q1 2026, after which TC Transcontinental will focus on its Retail Services & Printing and Educational Publishing businesses.

Key Details

• Purchase Price: Approx. C$2.10 billion payable in cash (subject to customary adjustments for debt, cash, net working capital).
• Enterprise Value: Approx. C$2.22 billion inclusive of assumed indebtedness and lease obligations (exchange rate 1.38 CAD/USD).
• Valuation Multiples: ~8.7× LTM adjusted EBITDA (IFRS) or ~9.0× (Pre‑IFRS) for the Packaging sector as of July 27 2025.
• Shareholder Distribution: Expected C$20.00 per share on Class A and Class B shares – C$7.00 per Class A share via capital reduction, <C$1.00 per Class B share, remainder as cash dividend.
• Approvals Required: Shareholder approval (≥66⅔% of votes of Class A Subordinate Voting Shares & Class B Multiple Voting Shares), regulatory approvals, and customary closing conditions.
• Timeline: Proxy circular to be mailed by Dec 19 2025; special shareholders’ meeting expected by end of Jan 2026; anticipated closing in Q1 2026.
• Board Recommendation: Unanimous recommendation in favor of the transaction; major shareholder Capinabel Inc. committed to vote “yes” (holds ~65.96% of voting power).
• Fairness Opinions: CIBC Capital Markets and RBC Capital Markets issued fairness opinions confirming financial fairness of the consideration.
• Post‑Transaction Financial Outlook: Pro forma net indebtedness ratio expected at ~1.7×; strong liquidity retained for disciplined investments.
• Packaging Sector 12‑Month Metrics (ended July 27 2025): Revenue ≈ US$1.6 billion, operating earnings ≈ US$157 million, adjusted EBITDA ≈ US$255 million.
• Corporation Adjusted EBITDA (excluding Packaging) – 12 months: Approx. US$215 million; pro forma revenue for remaining business ≈ US$1.2 billion.
• Advisors: Financial – CIBC Capital Markets, RBC Capital Markets; Legal – Stikeman Elliott LLP, Morgan Lewis & Bockius LLP.
• Conference Call: Hosted at 8:30 a.m. ET on Dec 8 2025 (dial‑in 1‑289‑514‑5100; webcast available on TC Transcontinental website).

Notable Quotes

• “This transaction delivers immediate and significant value to our shareholders… It highlights the quality of our Packaging assets…” – Isabelle Marcoux, Executive Chair.
• “Our packaging colleagues will be joining a flexible packaging industry leader… This transaction will allow us to concentrate our resources on Retail Services & Printing and Educational Publishing.” – Thomas Morin, President & CEO, TC Transcontinental.

Materiality Assessment: Material – Positive (significant corporate restructuring, large cash proceeds, shareholder distribution, and strategic refocus).