Transcontinental (TCL-A) M&A announcement summary

Transaction overview

• ProAmpac will acquire the Packaging Business for an enterprise value of $2.22 billion, representing a significant premium and an acquisition multiple of 8.7x LTM adjusted operating earnings before depreciation and amortization as of July 27, 2025.

• Shareholders are expected to receive a cash distribution of approximately $20.00 per share, close to the current share price, with the remainder of proceeds used to reduce net debt.

• The transaction is expected to close in Q1 2026, subject to shareholder and regulatory approvals, with the largest shareholders committed to supporting the deal.

• The sale enables a strategic refocus on Retail Services & Printing and Educational Publishing, with ProAmpac selected after exploring multiple options.

• The board unanimously recommends the transaction, with a special meeting for shareholder approval expected by end of January 2026.

Strategic rationale and future focus

• The divestiture addresses intensifying competition in flexible packaging, industry consolidation, and high acquisition multiples, making further packaging expansion unattractive.

• The company will focus on Retail Services & Printing and Educational Publishing, both showing strong organic and acquisition-driven growth.

• The business mix is now more resilient, with increased exposure to higher-growth, less cyclical segments and ongoing innovation.

• The company will pursue further growth in these sectors through disciplined investments, technology upgrades, and targeted M&A, primarily in Canada.

• The company remains headquartered in Montreal and aims to grow its Canadian presence organically and through acquisitions.

Financial implications and capital allocation

• Pro forma net indebtedness ratio is expected to be about 1.7x, with LTM July 2025 adjusted EBITDA of $215 million.

• Shareholders will receive most of the transaction proceeds, with the remainder allocated to debt repayment; tax implications are minimal and net proceeds are expected to be around $2.1 billion.

• The company expects to maintain an annual dividend of about $0.24 per share, with a low payout ratio and room for future increases and continued M&A activity.

• Robust free cash flow generation supports disciplined capital allocation and future growth.

• Real estate monetization is ongoing, with $20 million realized and further proceeds expected from facility divestitures.