York-based Glatfelter has found a buyer for its largest but least profitable division, which includes a factory in Spring Grove.
The buyer is New York-based investment firm Lindsay Goldberg LLC, which is paying roughly $320 million in cash for the division and assuming about $40 million in costs for retiree health care.
The deal, expected to close in the fourth quarter, ends a process Glatfelter started in February, when it said it was exploring a sale or other alternative for its specialty papers division. The division’s products are used in book publishing, credit-card receipts, envelopes and other applications.
Glatfelter said it plans to focus on its other, more profitable divisions: composite fibers, used in food-related products, and airlaid materials, whose markets include health care.
“The divestiture of our Specialty Papers Business Unit represents a significant milestone for Glatfelter as we continue our transformation toward becoming a leading global engineered materials company. We are focused on enhancing shareholder value by devoting our investments and resources to accelerating the growth potential of our Composite Fibers and Advanced Airlaid Materials business units,” Dante C. Parrini, Glatfelter’s chairman and CEO, said in a statement. “We believe the sale of SPBU to Lindsay Goldberg creates an excellent opportunity for the business and its employees, who have remained steadfast in their dedication to Glatfelter and our customers.”
A representative for Lindsay Goldberg said the company declined to comment.
Specialty papers had sales of $783 million in the 12 months ending June 30, according to Glatfelter.
As of February, Glatfelter’s specialty papers unit employed 1,795 of the 4,200 people the company employed worldwide. The Spring Grove plant had 750 workers at that time, according to Business Journal records. Last summer Glatfelter laid off 70 employees from its specialty papers unit including 30 in Spring Grove.
Along with the facility in Spring Grove, the unit also includes a plant in Fremont, Ohio and Chillicothe, Ohio, according to Business Journal records.
Sales for specialty papers were $190 million for the three months, ending June 30, according to a filing with the U.S. Securities and Exchange Commission. The unit had an operating loss of $20. 9 million for the quarter.
In comparison, composite fibers had sales of $142.9 million and operating income of $13.2 million for the quarter. Airlaid materials had sales of $72.8 million and operating income of $7.6 million.
Glatfelter will use proceeds from the sale of the specialty papers unit to pay down debt, fund its pending acquisition of a Georgia-Pacific division and for general corporate purposes.
Lindsay Goldberg describes itself as an investment firm that partners with families, founders and long-term-oriented management teams that want to build their businesses. According to its website, it has invested in companies in a range of industries, including energy, senior living, manufacturing and hospitality.
In addition to paying cash and assuming liability for retiree health care at Glatfelter, Lindsay Goldberg is assuming about $250 million in pension liabilities for the specialty papers unit and inheriting about $300 million in assets in Glatfelter’s pension plan.
The purchase price is subject to adjustment, according to Glatfelter.
Credit Suisse is serving as financial adviser and Shearman & Sterling as legal advisor to Glatfelter on the transaction.
Editor’s note: This story has been updated from its original version to include more financial information about Glatfelter’s business units, as well as comments from Lindsay Goldberg.