King & Spalding Advises Glatfelter on Berry Global Group's Spin-Off and Merger with Glatfelter

On February 6, 2024, our client, Glatfelter Corporation (“GLT”), a publicly traded, NYSE listed company, entered into definitive agreements with Berry Global Group, Inc. (“BERY”), a publicly traded, NYSE listed company, pursuant to which BERY agreed to spin-off into a wholly owned subsidiary of BERY (“Spinco”), and merge, the majority of its Health, Hygiene and Specialties (“HH&S”) segment with GLT to create a leading, publicly traded company in the specialty materials industry (the “Transaction”). The Transaction was structured as a Reverse Morris Trust Transaction, a uniquely structured transaction which only occurs two to three times per year, and the Transaction is intended to be tax-free to BERY, GLT and their respective shareholders for U.S. federal income tax purposes. Upon consummation of the Transaction, BERY shareholders will own 90% of the combined company's common shares, and GLT shareholders will own the remaining 10% of the combined company. The Transaction values the combined company at $3.6 billion on an enterprise value basis, and closing of the Transaction is expected to occur in the second half of 2024. In connection with the Transaction and the execution of the Reverse Morris Trust Transaction Agreement, the parties negotiated and entered into several additional agreements, including the following: (a) a Separation and Distribution Agreement, which sets forth the terms and conditions regarding the separation of the HH&S segment from BERY and identifies and provides for the transfer of certain assets of BERY to Spinco, and the assumption of certain liabilities of BERY by Spinco; (b) an Employee Matters Agreement, which governs the parties’ respective obligations with respect to current and former employees of the HH&S segment and certain other employee compensation and benefits matters relating to the transaction, including, without limitation, the treatment of BERY’s outstanding equity awards as of the closing; (c) a Tax Matters Agreement, which governs the parties’ respective rights, responsibilities and obligations with respect to taxes, tax attributes, the preparation and filing of tax returns, responsibility for and preservation of the expected tax-free status of the Transaction, and certain other tax matters; and (d) a Debt Commitment Letter, which will provide Spinco proceeds to repay certain existing indebtedness of GLT, repay certain obligations of Spinco owing to certain subsidiaries of BERY, and to pay transaction fees and expenses related to the Transaction. GLT is a leading global supplier of engineered materials with a strong focus on innovation and sustainability. GLT’s high-quality, technology-driven, innovative, and customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®. These include personal care and hygiene products, food and beverage filtration, critical cleaning products, medical and personal protection, packaging products, as well as home improvement and industrial applications. BERY focuses on innovative packaging solutions to make life better for people and the planet. BERY leverages global capabilities, sustainability leadership, and deep innovation expertise to serve customers of all sizes around the world. Harnessing the strength in BERY’s diversity and industry-leading talent of over 40,000 global employees across more than 250 locations, BERY partners with customers to develop, design, and manufacture innovative products with an eye toward the circular economy. Additionally, BERY’s HH&S segment has an extensive portfolio of proprietary technologies, with a strong focus on healthcare, hygiene, and specialty end markets. The King & Spalding Team advising GLT on the Transaction was led by Jonathan Newton, Robert Leclerc, Heath Trisdale, and Austin Paalz.