Carlyle’s Chesapeake and Madison Dearborn’s MPS merge

Chesapeake Services Limited, a Carlyle portfolio company, and Multi Packaging Solutions, a Madison Dearborn portfolio company, have inked an agreement to merge the two businesses. The combined company will have sales of more than $1.4 billion. Credit Suisse served as financial advisor to Chesapeake and Carlyle while Barclays and Moelis & Company advised MPS and Madison Dearborn in the transaction. Chesapeake is a consumer packaging company while MPS is a provider of packaging solutions to blue chip clients in the healthcare, consumer and multimedia sectors.

PRESS RELEASE

LONDON AND CHICAGO – November 19, 2013 – The Carlyle Group (NASDAQ: CG) (“Carlyle”) and Madison Dearborn Partners, LLC (“Madison Dearborn”) announced today that Chesapeake Services Limited (“Chesapeake”), a Carlyle portfolio company, and Multi Packaging Solutions, Inc. (“MPS”), a Madison Dearborn portfolio company, have entered into a definitive agreement to merge the two businesses. Reference is made to a joint press release issued by Chesapeake and MPS earlier today. Completion of the merger is subject to customary closing conditions, including regulatory approval.
The combined company will have sales of more than $1.4 billion on a pro forma basis. Management believes the transaction will create substantial expected synergies that will result in a reduction in senior secured leverage at Chesapeake and a meaningful decrease in total leverage at MPS. Management further believes that the transaction is neutral to leverage at MPS excluding potential synergies.
It is currently anticipated that Chesapeake’s existing senior secured credit facilities will remain in place after being expanded and amended and restated with modifications to provide for, among other things, a co-borrower structure with MPS. MPS’s existing senior secured credit facilities will be repaid at par and existing MPS Lenders will be offered the opportunity to roll into the new amended and restated Chesapeake senior secured credit facilities . Additionally, an incremental USD term loan in the amount of approximately $122 million will be incurred to fund an equalization payment and to pay transaction related fees and expenses. In addition, MPS expects to solicit consents from holders of its outstanding 8.500% Senior Notes due 2021 (the “Notes”) to amend the Indenture so that the Notes will remain in place and allow the combined entity greater flexibility in operations. Barclays will act as Joint Solicitation Agent on the contemplated consent solicitation.
In connection with the transaction, Credit Suisse acted as financial advisor to Chesapeake and Carlyle, and Latham & Watkins LLP served as legal counsel. Barclays and Moelis & Company acted as financial advisors to MPS and Madison Dearborn, and Ropes & Gray LLP served as legal counsel. Weil, Gotshal & Manges LLP served as legal counsel to Credit Suisse and Barclays.
About The Carlyle Group
The Carlyle Group is a global alternative asset manager with $185 billion of assets under management across 122 funds and 81 fund of funds vehicles as of September 30, 2013. Carlyle’s purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,450 people in 34 offices across six continents.
About Madison Dearborn Partners, LLC
Madison Dearborn Partners, based in Chicago, is a leading private equity investment firm in the United States. Since Madison Dearborn’s formation in 1992, the firm has raised six funds with aggregate capital of over $18 billion and has completed approximately 125 investments. Madison Dearborn invests in businesses across a broad spectrum of industries including basic industries, where packaging is a core focus area; business and government services; consumer; health care; financial and transaction services; and telecom, media and technology services. For more information, please visit www.mdcp.com.
About Chesapeake
Chesapeake is an international manufacturer of consumer packaging. The company is a leading supplier of printed folding cartons, leaflets and labels, as well as other specialist packaging to the pharmaceutical, confectionery, spirits and food markets. Chesapeake has 38 locations in Europe, the United States, and Asia and employs approximately 5,000 people worldwide.
About MPS
MPS is a leading, global provider of value-added packaging solutions to a diverse, blue chip customer base across the healthcare, consumer and multi-media end markets. MPS provides its customers with an extensive array of print-based specialty packaging, including premium folding cartons, labels and inserts across a variety of substrates and finishes. MPS has 16 manufacturing locations in the United States and Europe and employs approximately 2,500 people.