Canadian specialty label and packaging company CCL Industries Inc. (TSX: CCL.A; CCL.B), agreed to acquire Checkpoint Systems, Inc. (NYSE:CKP), a global supplier of merchandise availability solutions for the retail industry, in a cash transaction valued at $556 million, including net cash.
Checkpoint is a leading manufacturer of technology-driven, loss prevention, inventory management and labeling solutions, including RF and RFID-based, to the retail and apparel industry. The business has operations in 29 countries including 46 go-to-market units and 21 manufacturing facilities. For the last twelve months ended September 27, 2015, Checkpoint generated net revenue of approximately $820 million and Adjusted EBITDA (before synergies) of $83 million, resulting in an Adjusted EBITDA margin of 10.2%.
CCL will pay CKP shareholders $10.15 per share in cash. The purchase price represents a premium of 29% over Checkpoint’s closing share price on March 1, 2016, and a 50% premium over the 30-day volume-weighted average price. The deal is subject to customary closing conditions, including approval by a majority of Checkpoint’s shareholders. Checkpoint’s board of directors has unanimously approved the deal and recommended that its shareholders vote to approve the merger agreement.
“We have admired Checkpoint for many years as they built a unique, leading global position providing technology-driven label solutions to the retail & apparel industry,” said Geoffrey T. Martin, president and CEO of CCL. “We are very pleased to welcome their deeply experienced people to CCL where they will continue to focus on this important industry for emerging ‘smart label’ technologies.”
“This transaction represents a highly attractive premium for Checkpoint’s shareholders,” said Checkpoint Systems President and CEO, George Babich. “CCL is a recognized global leader in labeling and packaging. Checkpoint, as a division of CCL upon closing, will be able to invest in and grow Checkpoint’s industry leading hardware, software and consumables to create a unique offering, the future of inventory management for brand owners and leading retailers worldwide.”
In connection with this transaction, Morgan Stanley & Co. LLC is serving as financial advisor and Latham & Watkins LLP and Stradley Ronon Stevens & Young, LLP are serving as legal counsel to Checkpoint. BMO Capital Markets acted as CCL’s exclusive financial advisor. Warner Norcross & Judd acted as legal counsel to CCL.
Checkpoint Systems, Inc. is a global leader in merchandise availability solutions for the retail industry, encompassing loss prevention and merchandise visibility. Checkpoint provides end-to-end solutions enabling retailers to achieve accurate real-time inventory, accelerate the replenishment cycle, prevent out-of-stocks and reduce theft, thus improving merchandise availability and the shopper’s experience. Checkpoint’s solutions are built upon 45 years of radio frequency technology expertise, innovative high-theft and loss-prevention solutions, market-leading RFID hardware, software, and comprehensive labeling capabilities, to brand, secure and track merchandise from source to shelf. Checkpoint’s customers benefit from increased sales and profits by implementing merchandise availability solutions, to ensure the right merchandise is available at the right place and time when consumers are ready to buy. The company was founded in 1969 and is headquartered in Thorofare, N.J.
CCL Industries employs more than 13,000 people operating 122 production facilities in 31 countries on 6 continents with corporate offices in Toronto, Canada and Framingham, Mass. CCL Label is the world’s largest converter of pressure sensitive and extruded film materials for a wide range of decorative, instructional and functional applications for large global customers in the consumer packaging, healthcare & chemicals, consumer durable, electronic device & automotive markets. Extruded & laminated plastic tubes, folded instructional leaflets, precision decorated & die cut components, electronic displays and other complementary products and services are sold in parallel to specific end-use markets. Avery is the world’s largest supplier of labels, specialty converted media and software solutions to enable short-run digital printing in businesses and homes alongside complementary products sold through distributors and mass market retailers. CCL Container is a leading producer of impact extruded aluminum aerosol cans and bottles for consumer packaged goods customers in the United States and Mexico. CCL partly backward integrates into materials science with capabilities in polymer extrusion, adhesive development and coating, surface engineering and metallurgy that are deployed across all three business segments.