PE-owned Novolex to buy Packaging Dynamics

Novolex, which is owned by Wind Point Partners, has agreed to buy Packaging Dynamics, a provider of flexible packaging solutions. No financial terms were disclosed. The deal is expected to be completed in the fourth quarter of this year. Deutsche Bank, BMO Capital Markets, DLA Piper and Nelson, Mullins, Riley & Scarborough advised Wind Point on the transaction while Harris Williams and Ropes & Gray advised Packaging Dynamics. Kohlberg & Company currently owns Packaging Dynamics.

PRESS RELEASE

NOVOLEX and Packaging Dynamics Corporation today jointly announced that they have entered into a definitive merger agreement whereby NOVOLEX will acquire Packaging Dynamics. The combined companies will offer a broad and complementary range of paper and plastic flexible packaging products across foodservice, grocery, retail, food manufacturing, industrial and distribution end markets. The $1.9 billion revenue company will operate under the NOVOLEX name and will be comprised of 35 manufacturing locations in North America, a world-class plastic recycling facility, and over 5,100 employees. The transaction is expected to close in the fourth quarter of 2014 after required regulatory approvals are received.

Wind Point Partners acquired NOVOLEX (formerly known as Hilex Poly) in 2012, in partnership with CEO Stan Bikulege. Prior to joining NOVOLEX, Stan served as the CEO of Exopack, a paper and plastic converting company, and Renaissance Mark, a label manufacturer.

“Packaging Dynamics has an outstanding reputation for product innovation and allows NOVOLEX to significantly expand our presence in the foodservice market,” said Bikulege. “Packaging Dynamics’ ecofriendly paper packaging products also meet growing consumer demand for green packaging and advances NOVOLEX’s objectives for packaging choice and sustainability leadership. Also, we believe joining our two companies creates value for our customers through operational excellence and customer-focused service.”

Packaging Dynamics is NOVOLEX’s third acquisition. NOVOLEX acquired portions of the North American Flexible Packaging division of Amsterdam-based Clondalkin Group in 2013 and Duro Bag Manufacturing Company earlier this year.
“Our investment thesis was to build upon the strong operational platform of Hilex Poly and through acquisitions and organic growth to create a broader, more diversified flexible packaging leader.”- Alex Washington

Alex Washington, a managing director at Wind Point, said “Our investment thesis was to build upon the strong operational platform of Hilex Poly and through acquisitions and organic growth to create a broader, more diversified flexible packaging leader. The addition of Packaging Dynamics is an ideal next step in that transformation.”

Packaging Dynamics, which is owned by funds managed by Kohlberg & Company, manufactures a broad portfolio of flexible, paper-based food packaging products including specialty bags, specialty sheets and wraps, interfolded tissue, pan liners, and freezer/butcher paper products, as well as specialty laminated foil products. Packaging Dynamics’ operating business units are BagcraftPapercon, De Luxe, International Converter, General Packaging Products, and Pac Paper.

Roger Prevot, CEO of Packaging Dynamics, commented, “This combination of truly complementary businesses under the NOVOLEX banner creates exciting new opportunities to continue building a world-class organization with industry-leading brands and significant growth potential.” Seth H. Hollander, partner of Kohlberg, commented, “After several acquisitions and divestitures, combined with outstanding leadership from Roger and his world-class management team, we are pleased to have created a unique, focused market leader in the flexible food packaging market. The combination with Novolex represents an ideal next step in the evolution of Packaging Dynamics.”

Financing for the transaction will facilitate the purchase price and retire Packaging Dynamics’ existing Senior Secured Notes. The debt facility is fully underwritten and will be jointly arranged by Deutsche Bank, GE Capital, Macquarie Capital, and BMO Capital Markets. Deutsche Bank, BMO Capital Markets, DLA Piper, and Nelson, Mullins, Riley & Scarborough acted as advisors to Wind Point. Harris Williams & Co. and Ropes & Gray LLP acted as advisors to Packaging Dynamics.