ALPHARETTA, Ga. (News release) -- Mativ Holdings, Inc. ("Mativ" or the "Company") (NYSE: MATV) announced today that it has received a binding offer from Evergreen Hill Enterprise, Pte. Ltd., to acquire Mativ's Engineered Papers business ("EP"), part of Mativ's Fiber Based Solutions reporting segment, for $620 million. Subject to customary closing date adjustments, Mativ expects to receive net proceeds (net of taxes and other items) of approximately $575 million in the proposed transaction, which would be primarily used for debt paydown.

Julie Schertell, CEO of Mativ, commented, "The proposed sale of Engineered Papers is a key milestone in the transformation of Mativ and aligns with our strategy to focus our efforts, accelerate growth, and drive value for our shareholders. This pivotal action positions our portfolio for faster growth and focuses our resources on categories with the most promising revenue and margin expansion opportunities. While a solid business, EP's concentration in the tobacco industry is not aligned with Mativ's long-term ambition and presents a more attractive value proposition under new strategic ownership. Our talented and dedicated employees will continue to deliver outstanding products and service to EP's long-standing customer base, and we are confident in a smooth transition."

"The sale process has also given us the opportunity to rebalance our capital allocation approach, with the top near-term priority being debt reduction. In addition to paying down debt from the sale proceeds, we are also right-sizing our dividend to align with our reshaped portfolio, support continued near-term de-leveraging, and position the Company for future growth investments. In addition, our board has approved a $30 million share repurchase program, providing added flexibility in our cash returns to shareholders. We believe our stock represents an attractive value and expect to opportunistically execute share repurchases going forward."

"Since our July 2022 merger, the management team and Board of Directors have been committed to making deliberate and carefully considered decisions to unlock the long-term value we see in Mativ as a leading specialty materials provider. The scope of these decisions and actions include strategic portfolio optimization, capital allocation, organic investments, restructuring, and many other critical factors in realizing the enterprise's full potential. Ultimately, we see the sale of EP and a more balanced capital allocation strategy that accelerates de-leveraging as the strongest path forward to amplify our long-term profit outlook and drive maximum value creation for our shareholders."

Transaction Details

• The proposed transaction will also be subject to customary closing conditions, including regulatory approvals and satisfaction of the consultation process with the applicable works councils in France, and is expected to close in the fourth quarter of 2023
• Evergreen Hill Enterprise, Pte. Ltd., an affiliate of BMJ, is based in Singapore and is part of a successful, Indonesian-based privately held group of diversified companies serving a wide variety of industries, such as banking, tobacco, consumer electronics, telecommunications, fast moving consumer goods, e-commerce, plantation, hotels & real estate, and many others
• The potential buyer is expected to fund the proposed transaction with existing cash balance and is not dependent on capital markets for financing

Divestiture & Debt Reduction Highlights

• The gross sale price of $620 million reflects approximate 6.5x multiple on EP's trailing 12-month Adjusted EBITDA (as of June 30, 2023 quarter); trailing 12-month sales for EP were approximately $530 million
• Expected net transaction proceeds of approximately $575 million will be used primarily to reduce debt; net proceeds represent approximately 35% of outstanding net debt
• Engineered Papers financial results will be reported as assets held for sale beginning in 3Q:23

Capital Allocations Plans

• The Company intends to adjust the annualized dividend of $1.60 per share to $0.40 per share, effective for the September 2023 dividend payment; this represents a total annual dividend payment reduction from $88 million to $22 million
• Management estimates the new dividend will represent approximately 25% of annualized free cash flow post-transaction, reflecting a more growth-oriented and balanced allocation of capital
• Further, the Company has approved a $30 million stock buyback program; while opportunistic repurchases are expected to be executed, debt reduction will continue to be the primary use of excess cash flow in the near-term

Post-Transaction Mativ Financial Highlights

• The Company believes its total post-transaction near-term sales would be approximately $2.2 billion with an Adjusted EBITDA margin of approximately 13%
• Following the transaction, the Company expects to deliver long-term annualized sales growth in the 3% to 5% range, and multi-year margin expansion toward our 15% target
• As a result of debt reduction upon close, a rebalanced capital allocation strategy, and expected core EBITDA growth, the Company believes it will be within its targeted credit agreement net leverage range of 2.5x to 3.5x by the end of 2024
• Following the transaction, Mativ will no longer have exposure to the tobacco industry

Transaction Investor Conference Call

• Mativ management will hold a conference call and webcast today, August 1^st at 10:00 am ET to discuss the transaction. The live event can be accessed directly by visiting the Investor Relations section of Mativ's website at http://ir.mativ.com or by using the following link https://events.q4inc.com/attendee/892546572. In addition, an investor presentation is available on the website. Today's conference call may also be accessed by dialing 833-470-1428 or 404-975-4839 and providing the access code 320046
• A replay of the webcast will be available on the Company's website at http://ir.mativ.com or by dialing 866-813-9403 or 929-458-6194 and providing the access code 320252

Advisors

• Morgan Stanley & Co. LLC served as financial advisor and King & Spalding LLP served as legal advisor to Mativ

Second Quarter 2023 Results

• 2Q:23 earnings release scheduled for August 9^th, 2023, after the market closes, with investor call the morning of August 10^th at 8:30 AM ET
• The Company expects to report strong sequential improvement in Adjusted EBITDA for 2Q:23 versus 1Q:23, consistent with comments provided in the first quarter earnings release

About Mativ

Mativ Holdings, Inc. is a global leader in specialty materials headquartered in Alpharetta, Georgia. The Company offers a wide range of critical components and engineered solutions to solve our customers' most complex challenges. With over 7,500 employees worldwide, we manufacture on four continents and generate sales in more than 100 countries. The Company's two operating segments, Advanced Technical Materials and Fiber-Based Solutions, target premium applications across diversified and growing end-markets, from filtration to healthcare to sustainable packaging. Our broad portfolio of technologies combines polymers, fibers, and resins to optimize the performance of our customers' products across multiple stages of the value chain. Our leading positions are a testament to our best-in-class global manufacturing, supply chain, and materials science capabilities. We drive innovation and enhance performance, finding potential in the impossible.