Canadian company Cascades announced on the Toronto Stock Exchange the sale of its 57.6% controlling stake in the Reno De Medici Group. The acquisition of the paper group, which specialises in circular economy cartonboard, is being taken over by a company owned by funds controlled by Apollo Global Management.
Apollo Management L.P. is a U.S. investment firm whose portfolio companies include Caesars Entertainment Corporation, CEVA Logistics, Jacuzzi, Norwegian Cruise Line and Oceania Cruises. It specialises in private equity: it invests private capital by acquiring shares in companies with the aim of making them grow, increase their value and resell them at a high profit. Above all, it is in leveraged buyout operations: that is, it identifies companies with large growth margins, buys them with debt and pays it back with the profits the company will make through growth.
The Apollo funds will buy around 67% of Reno De Medici’s capital from the company’s two largest shareholders, Cascades and Caisse de dépot et placement du Québec, at a price of 1.45 EUR per share. In practice, the operation cost about 315.3 million (equivalent to about 461 million Canadian dollars).
For financial sector insiders, the sale price represents a 24% premium over the weighted average price of Reno De Medici shares. Completion of the transaction, which is subject to the occurrence of typical conditions precedent, as detailed below, is expected by the third quarter of 2021. Once this step has been taken, Apollo will launch a mandatory takeover bid for the remaining shares with a view to delisting the company.
Reno De Medici, a fast-growing group
RDM is the leading producer of recycled-based coated board in Italy, France and the Iberian Peninsula, and the second largest producer in Europe. With 100% of its products made from recycled materials, the group plays a central role in increasing sustainability and contributing to a circular economy by minimising waste, emissions and the use of raw materials and water. During the year, RDM Group acquired paper mills in Spain (a recently completed sale) and committed to acquire paper mills in the Netherlands; once completed, RDM Group’s operations will be carried out across Europe and the US by nine paper mills and five specialised cutting and web making centres. Apollo expects the RDM Group to continue to benefit from increasing changes in consumer preferences and European-wide regulations supporting the use of sustainable and recycled fibres. «Already among Europe’s leaders in recycled-based cartonboard,» comments Marc Becker, Senior Partner and Co-Lead of Apollo Impact, «RDM is well positioned for continued growth as more and more companies decide to replace plastic with sustainable packaging. We see RDM as a proven platform for inorganic growth and look forward to working with Michele (Bianchi, editor’s note) and the Company’s management team to continue to grow the Company’s business while pursuing an even greater positive impact on the environment. As the first investment driven by the Apollo Impact platform, RDM fully embraces our strategy of seeking out viable businesses where we believe we can drive profitability and performance to increase positive impacts for society and the planet.»
«We are thrilled to be working with Apollo in this next phase of growth for RDM. Over the past five years, our exceptional team has made significant progress in growing our platform and optimising our operations across Europe,» says Michele Bianchi, RDM Group CEO. «Looking ahead, we are equally excited about Apollo’s shared commitment to the circular economy, of which we are both contributors and beneficiaries. We look forward to tackling our ambitious sustainability goals and contributing to a better future for all our stakeholders.»
«RDM highlights the important role Italy is playing in building a more sustainable global economy and Apollo’s commitment to working with Italy’s best companies, entrepreneurs and managers to support their long-term growth,» concludes Andrea Moneta, Apollo’s Senior Advisor for Italy.
The numbers of Reno De Medici
RDM Group had a turnover of 679 million EUR in 2020 and a total of 1729 employees. Last year it produced 1.340 million tons of material and its sales network touches 70 countries. One of the Group’s six plants is in Villa Santa Lucia, which has a production capacity of 220 thousand tons, concentrated in the Wlc sector.