On January 23, 2017, Multi Packaging Solutions International Limited, a Bermuda
exempted company (
MPS
), entered into an Agreement and Plan of Merger (the
Merger Agreement
) with WestRock Company, a Delaware corporation (
WestRock
), and WRK Merger Sub Limited, a Bermuda
exempted company (
Merger Sub
), which Merger Agreement stated the terms and conditions on which WestRock would acquire MPS (the
Proposed Transaction
).
As previously disclosed, between February 28, 2017 and March 8, 2017, three purported class action complaints concerning the Proposed Transaction
were filed in the United States District Court for the Southern District of New York against all or some of the following: MPS, certain of MPSs current executive officers and directors, WestRock, and Merger Sub (together, the
Merger
Litigation
). The plaintiffs in the Merger Litigation claimed that the definitive proxy statement on Schedule 14A filed by MPS with the United States Securities and Exchange Commission on March 3, 2017, and mailed to the MPS
shareholders on or about March 7, 2017 (the
Proxy Statement
), omitted material information regarding the Proposed Transaction.
The parties to the Merger Litigation subsequently engaged in
arms-length
negotiations to attempt to resolve the
claims asserted in the Merger Litigation, and reached an agreement whereby MPS would file on this Current Report on
Form 8-K
(this
Form
8-K
)
certain supplemental disclosures regarding the Proposed Transaction.
The parties to the Merger Agreement believe that no further disclosure is required
to supplement the Proxy Statement. However, to avoid the risk that the Merger Litigation may delay or otherwise adversely affect the consummation of the Proposed Transaction, MPS hereby makes the supplemental disclosures to the Proxy Statement set
forth below.
The supplemental disclosures in this Form
8-K
should be read in conjunction with the disclosures
contained in the Proxy Statement, which in turn should be read in its entirety. To the extent that information in this Form
8-K
differs from or updates information contained in the Proxy Statement, the
information in this Form
8-K
shall supersede or supplement the information in the Proxy Statement. Nothing in this Form
8-K
shall be deemed an admission of the legal
necessity or materiality of any of the disclosures set forth herein.
Capitalized terms used herein, but not otherwise defined, shall have the meanings
ascribed to such terms in the Proxy Statement.
The following disclosures supplement and amend the existing disclosures contained under the
caption The Merger Opinion of BofA Merrill Lynch MPS Financial Analyses beginning on page 39 of the Proxy Statement:
The
following disclosure supplements and amends the disclosure on page 39 of the Proxy Statement under the caption Selected Publicly Traded Companies Analysis by replacing the last sentence on such page in its entirety with the
following sentence, and adding the following table below the summary table on that page:
The following tables set forth the underlying
observed data for each of the statistics considered:
|
|
|
|
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|
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|
Selected Publicly Traded Company
|
|
CY2016E 2018E
EBITDA CAGR
|
|
|
CY2017E
EBITDA Margin
|
|
Amcor Limited (1)
|
|
|
6.2
|
%
|
|
|
15.3
|
%
|
AptarGroup, Inc.
|
|
|
4.8
|
%
|
|
|
20.5
|
%
|
Bemis Company, Inc.
|
|
|
5.7
|
%
|
|
|
15.3
|
%
|
Berry Plastics Group, Inc. (2)
|
|
|
3.7
|
%
|
|
|
18.8
|
%
|
CCL Industries Inc. (3)
|
|
|
3.3
|
%
|
|
|
20.8
|
%
|
Graphic Packaging Holding Company
|
|
|
4.1
|
%
|
|
|
18.3
|
%
|
Multi-Color Corporation
|
|
|
6.5
|
%
|
|
|
17.9
|
%
|
Sealed Air Corporation
|
|
|
5.6
|
%
|
|
|
17.7
|
%
|
WestRock Company
|
|
|
3.4
|
%
|
|
|
16.6
|
%
|
|
(1)
|
Amcor Limited adjusted for the acquisition of Sonocos Specialty Containers business.
|
|
(2)
|
Berry Plastics Group, Inc. adjusted for the acquisition of AEP Industries.
|
|
(3)
|
CCL Industries Inc. adjusted for the acquisition of the Innovia Group of companies.
|
The following disclosure supplements and amends the disclosure on page 40 of the Proxy Statement under the
caption Selected Publicly Traded Companies Analysis by inserting the following sentence and adding the following table before the second sentence on such page:
The table below sets forth EV / calendar year 2017 estimated EBITDA multiple for each of the selected publicly traded companies:
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|
|
|
Selected Publicly Traded Company
|
|
EV / CY2017E EBITDA
|
|
Amcor Limited (1)
|
|
|
11.
|
2x
|
AptarGroup, Inc.
|
|
|
10.
|
4x
|
Bemis Company, Inc.
|
|
|
9.
|
8x
|
Berry Plastics Group, Inc. (2)
|
|
|
9.
|
5x
|
CCL Industries Inc. (3)
|
|
|
10.
|
8x
|
Graphic Packaging Holding Company
|
|
|
7.
|
8x
|
Multi-Color Corporation
|
|
|
10.
|
7x
|
Sealed Air Corporation
|
|
|
11.
|
1x
|
WestRock Company
|
|
|
7.
|
9x
|
|
(1)
|
Amcor Limited adjusted for the acquisition of Sonocos Specialty Containers business.
|
|
(2)
|
Berry Plastics Group, Inc. adjusted for the acquisition of AEP Industries.
|
|
(3)
|
CCL Industries Inc. adjusted for the acquisition of the Innovia Group of companies.
|
The following disclosure supplements and amends the disclosure on page 40 of the Proxy Statement under the
caption Selected Precedent Transactions Analysis by replacing the chart on such page in its entirety with the following sentence, and adding the following table below:
The table below sets forth the EV / LTM EBITDA multiple observed for each of the selected transactions:
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Announcement Date
|
|
Acquiror
|
|
Target
|
|
EV / LTM
EBITDA
|
|
4/25/16
|
|
Ardagh Group SA
|
|
Ball Corporation /
Rexam Plc Divested Assets
|
|
|
8.6
|
x
|
6/8/15
|
|
Apollo Global
Management LLC
|
|
Verallia SA (Saint-
Gobain)
|
|
|
7.3
|
x
|
5/13/15
|
|
Owens-Illinois Inc.
|
|
Vitro SAB de CV Food & Beverage Glass Containers
|
|
|
7.7
|
x
|
2/19/15
|
|
Ball Corporation
|
|
Rexam Plc
|
|
|
9.5
|
x
|
1/26/15
|
|
Rock-Tenn Co.
|
|
MeadWestvaco Corporation
|
|
|
10.3
|
x
|
12/14/14
|
|
Graphic Packaging Holding Corporation
|
|
Cascades Inc.s folding carton assets
|
|
|
7.8
|
x
|
11/12/14
|
|
Essentra Plc
|
|
Clondalkin Group Specialist Packaging Segment
|
|
|
8.2
|
x (1)
|
9/1/14
|
|
Crown Holdings, Inc.
|
|
EMPAQUE
|
|
|
8.2
|
x (2)
|
2/14/14
|
|
Graphic Packaging Holding Corporation
|
|
Benson Group
|
|
|
6.6
|
x
|
10/31/13
|
|
Crown Holdings, Inc.
|
|
Mivisa Envases, S.A.U.
|
|
|
9.0
|
x
|
7/8/13
|
|
Madison Dearborn Partners, LLC
|
|
Multi Packaging Solutions Inc.
|
|
|
7.6
|
x
|
3/19/13
|
|
Essentra Plc
|
|
Contego Healthcare Limited (Platinum Equity)
|
|
|
8.9
|
x
|
11/12/12
|
|
Graphic Packaging Holding Corporation
|
|
Contego Packaging Holdings, Ltd.s European Food Carton Business
|
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|
6.8
|
x
|
10/2/12
|
|
Platinum Equity, LLC
|
|
BWAY Parent Company, Inc.
|
|
|
7.9
|
x
|
|
(1)
|
Based on 2013 EBITDA, as publicly disclosed.
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(2)
|
Based on estimated 2014 EBITDA, as publicly disclosed.
|
The following disclosure supplements and amends the disclosure contained on page 41 of the Proxy Statement under
the caption
Discounted Cash Flow Analysis by adding the below sentence prior to the last sentence in each of the two paragraphs of that section:
The range of the estimated present values of the U.S. federal NOLs MPS was forecasted to realize during MPSs fiscal year 2017
through fiscal year 2032, in each case based on the MPS Forecast, and using discount rates ranging from 8.2% to 9.8%, which were based on an estimate of MPSs weighted average cost of capital, was $10.2 million to $10.3 million.
The following disclosure supplements and amends the existing disclosures contained under the caption The Merger Certain Financial
Forecasts beginning on page 44 of the Proxy Statement:
The following table supplements and amends the disclosure on page 45 of the Proxy
Statement by replacing the table on such page in its entirety with the following:
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Fiscal Year Ending
June 30,
|
|
(Dollars in millions, except per share data)
|
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2017E
|
|
|
2018E
|
|
|
2019E
|
|
Net Sales
|
|
$
|
1,561
|
|
|
$
|
1,617
|
|
|
$
|
1,631
|
|
Net Income (1)
|
|
$
|
54
|
|
|
$
|
88
|
|
|
$
|
103
|
|
EBITDA (1) (2)
|
|
$
|
238
|
|
|
$
|
270
|
|
|
$
|
274
|
|
Depreciation
|
|
$
|
67
|
|
|
$
|
65
|
|
|
$
|
64
|
|
Amortization
|
|
$
|
51
|
|
|
$
|
48
|
|
|
$
|
41
|
|
EBIT (1) (2)
|
|
$
|
120
|
|
|
$
|
157
|
|
|
$
|
169
|
|
Net Interest Expense
|
|
$
|
50
|
|
|
$
|
38
|
|
|
$
|
31
|
|
Income Tax Expense
|
|
$
|
15
|
(4)
|
|
$
|
41
|
|
|
$
|
44
|
|
Decrease in Net Working Capital
|
|
$
|
11
|
(4)
|
|
$
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
60
|
|
|
$
|
58
|
|
|
$
|
58
|
|
Unlevered Free Cash Flow (1) (3)
|
|
$
|
82
|
(5)
|
|
$
|
171
|
|
|
$
|
172
|
|
Cash Flow from Operations (1)
|
|
$
|
165
|
|
|
$
|
214
|
|
|
$
|
223
|
|
|
(1)
|
The Management Forecast contemplated a
de minimis
amount of stock-based compensation for the relevant projection period.
|
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(2)
|
EBITDA is defined as net income excluding net interest expense, income tax expense, depreciation and amortization. EBIT is defined as net income excluding net interest expense and income tax expense. EBIT and EBITDA are
non-GAAP
financial measures and should not be considered as an alternative to operating income or net income as a measure of operating performance or cash flow or as a measure of liquidity.
|
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(3)
|
Terminal year unlevered free cash flow of $163 million used by BofA Merrill Lynch to perform a discounted cash flow analysis is based on fiscal year 2019 and assumes terminal year depreciation equal to 90.7% of
capital expenditures, terminal year capital expenditures of $58 million, amortization of $23 million and decrease in net working capital of $2 million, in each case as provided by MPS management.
|
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(4)
|
Represents a
six-month
projection period covering estimated 2017 third and fourth quarter values.
|
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(5)
|
Represents a
six-month
projection period covering estimated 2017 third and fourth quarter values. MPS management forecast net sales of $768 million, EBITDA of
$120 million, depreciation of $33 million, amortization of $25 million, EBIT of $62 million, income tax expense of $15 million, decrease in net working capital of $11 million and capital expenditures of $33 million
for such
six-month
projection period.
|
The following disclosure supplements and amends the disclosure on page 45 on the Proxy Statement by adding the
following immediately above the caption Interests of Certain Directors and Executive Officers of MPS on such page:
The following table reflects the value of certain NOLs MPS was forecasted to realize during MPSs fiscal year 2017 through fiscal year
2032 based on the MPS Forecast:
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Fiscal Year Ending
June 30,
|
|
(Dollars in millions)
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
2022E
|
|
|
2023E
|
|
|
2024E
|
|
|
2025E
|
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|
2026E
|
|
|
2027E
|
|
|
2028E
|
|
|
2029E
|
|
|
2030E
|
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|
2031E
|
|
|
2032E
|
|
NOL Utilization
|
|
$
|
47.5
|
|
|
$
|
4.9
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Additional Information and Where to Find It
In connection with the Proposed Transaction involving MPS, WestRock and Merger Sub, MPS filed the Proxy Statement with the SEC on March 3, 2017. The
Proxy Statement and a proxy card were first mailed on or about March 7, 2017 to each shareholder entitled to vote at the special meeting relating to the Proposed Transaction. INVESTORS AND SECURITY HOLDERS OF MPS ARE URGED TO READ THESE
MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED MERGER THAT MPS FILES WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MPS AND
THE PROPOSED MERGER. The Proxy Statement and any other relevant materials containing important information about MPS or the proposed merger (when they become available), as such documents are filed by MPS with the SEC, may be obtained free of charge
at the SECs website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by sending a request to MPSs Secretary at Multi Packaging Solutions International Limited, 885
Third Avenue, 28
th
floor, New York, New York 10022.
Participants in Solicitation
MPS and its directors and executive officers, and WestRock and its directors and executive officers, may be deemed to be participants in the solicitation of
proxies from MPSs shareholders with respect to the Proposed Transaction. Information about MPSs directors and executive officers and their ownership of MPSs common stock is set forth in MPSs Annual Report on
Form 10-K
for the fiscal year ended June 30, 2016, which was filed with the SEC on August 23, 2016 and MPSs proxy statement for its 2016 Annual General Meeting of Members, which was filed with
the SEC on October 6, 2016. Information about the directors and executive officers of WestRock is set forth in the proxy statement for WestRocks 2017 Annual Meeting of shareholders, which was filed with the SEC on December 16, 2016.
Information regarding the identity of the potential participants, and their direct or indirect interests in the merger, by security holdings or otherwise, is set forth in the Proxy Statement.