TC Transcontinental to Sell Packaging Business to ProAmpac

Transcontinental Inc. (“TC Transcontinental” or the “Corporation”) (TSX: TCL.A, TCL.B) announced that it has entered into a stock purchase agreement (the “Stock Purchase Agreement”) with ProAmpac Holdings Inc. (“ProAmpac”) and certain of its subsidiaries (collectively, the “Buyer”), pursuant to which the Buyer has agreed to purchase all of the issued and outstanding shares of capital stock of entities which carry on the business of the Corporation’s Packaging Sector (“TC Transcontinental Packaging” or the “Packaging Business”) (the “Transaction”). The Transaction will result in the divestiture of the Corporation’s entire interest in the Packaging Sector. All amounts in this press release are in Canadian dollars, unless indicated otherwise.

The aggregate purchase price payable to the Corporation, which implies an enterprise value of approximately $2.22 billion⁽¹⁾ inclusive of assumed indebtedness and lease obligations under IFRS, is approximately $2.10 billion⁽¹⁾, subject to customary adjustments for debt and debt-like items, cash, and net working capital. The Corporation expects to make a cash distribution to its shareholders of approximately $20.00 per share on Class A Shares and Class B Shares (based on the Corporation’s current issued and outstanding Class A Shares and Class B Shares as of December 5, 2025).

⁽¹⁾ Converted at an exchange rate of 1.38 CAD/USD.

The Transaction is subject to shareholder approval, regulatory approvals and other customary conditions.

Immediate Value Realization

Based on the agreed consideration and anticipated net proceeds, the Transaction represents a compelling valuation for the Packaging Business and is expected to deliver a meaningful return to TC Transcontinental’s shareholders.

“This transaction delivers immediate and significant value to our shareholders, with net proceeds representing a substantial premium to the value of the Packaging Business within TC Transcontinental’s share price. In this period of industry consolidation, we are maximizing shareholder value by acting decisively and from a position of strength. It highlights the quality of our Packaging assets, and the talented people who helped us build this business — whom I want to sincerely thank for their dedication and contribution,” said Isabelle Marcoux, Executive Chair of the Board. “I believe that TC Transcontinental Packaging has found an exciting new home, and I am confident that ProAmpac will be a strong cultural fit for our employees and that the combination will be well positioned to deliver increased value to customers.”

“As we approach our 50th anniversary, TC Transcontinental is once again reinventing itself. We are excited to open a new chapter in our history, with a sharp focus on advancing the transformation of our Retail Services & Printing and Educational Publishing businesses. The new TC Transcontinental will be a strong Canadian company, with its head office in Montreal, fully committed to growing its presence in Canada — both organically and through acquisitions — and to creating long-term value for its shareholders,” she added.

“This agreement is in the best interests of the Corporation and of our shareholders, as well as the customers and employees of TC Transcontinental Packaging,” said Thomas Morin, President and Chief Executive Officer, TC Transcontinental. “Our packaging colleagues will be joining a flexible packaging industry leader with an entrepreneurial culture and a shared commitment to safety, customer service, sustainability, and innovation. I am grateful for the dedication and engagement of our teams in proudly building this business over the past 11 years. This transaction will allow us to concentrate our resources on our Retail Services & Printing and Educational Publishing activities.”

“This acquisition is a transformative milestone for ProAmpac and TC Transcontinental Packaging. Through TC Transcontinental Packaging, ProAmpac is broadening its end-market focus to include protein, dairy, and medical segments, and expanding its geographic presence. Together we are committed to delivering high-performing and increasingly sustainable packaging solutions to customers,” said Greg Tucker, Founder, Vice Chairman, and Chief Executive Officer of ProAmpac. “TC Transcontinental Packaging and ProAmpac share the same dedication to excellence, customer focus, and doing business the right way. We are thrilled to welcome the TC Transcontinental Packaging team into the ProAmpac family.”

Transaction Details

The Transaction implies an enterprise value of approximately $2.22 billion⁽¹⁾ which represents an acquisition multiple of approximately 8.7x the Packaging Sector’s LTM adjusted operating earnings before depreciation and amortization⁽²⁾ as of July 27, 2025 on an IFRS basis, or 9.0x the Packaging Sector’s LTM adjusted operating earnings before depreciation and amortization(2) as of July 27, 2025 on a Pre-IFRS basis⁽³⁾. The aggregate purchase price payable to the Corporation in cash is approximately $2.10 billion⁽¹⁾ and is subject to customary adjustments for debt and debt-like items, cash, and net working capital. Completion of the Transaction is subject to shareholder approval, applicable regulatory approvals and other customary closing conditions. The Stock Purchase Agreement contains, among other things, customary provisions that allow the Board to consider unsolicited superior proposals, subject to standard “right to match” and break fee provisions.

The Transaction will constitute the sale of all or substantially all of the assets of the Corporation pursuant to the Canada Business Corporations Act, and accordingly will require the approval of at least two thirds (66 2/3%) of the votes cast by holders of Class A Subordinate Voting Shares (the “Class A Shares”) and Class B Multiple Voting Shares (the “Class B Shares”). The Corporation will seek approval of the Transaction by its shareholders at a special meeting of shareholders (the “Meeting”). The Corporation currently expects to mail the management proxy circular in connection with the Meeting to shareholders on or before December 19, 2025, and to hold the Meeting by the end of January 2026. Subject to the satisfaction (or waiver) of applicable closing conditions and the receipt of applicable regulatory approvals, the Transaction is expected to close in the first quarter of calendar year 2026.

Board Recommendation

The Board of Directors of the Corporation (with one interested director abstaining) has unanimously determined that the Transaction is in the best interest of the Corporation and will unanimously recommend that shareholders vote in favour of the Transaction at the Meeting. Capinabel Inc., the Corporation’s largest shareholder, has entered into a voting agreement to vote in favour of the Transaction at the Meeting. As of December 5, 2025, Capinabel beneficially owns 8 714 884 Class B Multiple Voting Shares, in the aggregate carrying approximately 65.96 % of the votes attached to all of the outstanding shares of the Corporation.

CIBC Capital Markets and RBC Capital Markets each provided an opinion to the Board of Directors that, as of the date thereof and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by the Corporation pursuant to the Transaction was fair, from a financial point of view, to the Corporation. Copies of such fairness opinions will be available in the management proxy circular that will be prepared for the Meeting. The opinions of CIBC and RBC are not recommendations as to whether or not any shareholder of the Corporation should vote to approve the Transaction or any other matter.

Further information regarding the Transaction will be included in the management proxy circular that will be prepared for the Meeting. The description of the Transaction in this news release does not purport to be complete and is subject to, and qualified in its entirety by reference to, the contents of the management proxy circular. Shareholders are encouraged to carefully review the management proxy circular when it becomes available.

Use of Proceeds

In the event the Transaction is ultimately approved at the Meeting, the Corporation expects to distribute approximately $20.00 (the “Distribution”) to shareholders upon closing, through: (i) a reduction of stated capital (the “Capital Reduction”) of approximately $7.00 per Class A Share, and less than $1.00 per Class B Share, and (ii) a cash dividend distribution for the balance of the expected Distribution. Any Capital Reduction is subject to shareholder approval.

The Corporation expects a pro forma Net indebtedness ratio of approximately 1.7x post-Transaction, reflecting deleveraging from the sale and prudent capital allocation.⁽¹⁾

Following the Distribution, the Corporation expects to maintain a strong liquidity position to support disciplined investments, subject to Board approval and market conditions.

Further details regarding the Distribution and the Capital Reduction will be disclosed in the management proxy circular.

⁽¹⁾ Please refer to the section entitled “Non-IFRS Financial Measures” in this press release for a definition of these measures.

Financial Outlook

Detailed information regarding the Transaction, including pro forma financial information showing the expected impact of the Transaction on the Corporation’s continuing operations, will be included in the management proxy circular that will be prepared for the Meeting.

Management has made preliminary estimates of selected financial information regarding the Packaging Sector and the Corporation’s continuing operations following the closing of the Transaction to provide shareholders with an indication of the relative size of the remaining business. These preliminary estimates are based on the last twelve months ended July 27, 2025, including an estimate of the impact of the Transaction.

These preliminary estimates have not been audited or reviewed by any third party, have been derived from internal management reporting, and reflect sales, cost and expense allocations, including with respect to corporate expenses, as well as other estimates and adjustments, each of which is preliminary in nature and subject to change. See “non-IFRS financial measures” for further important information on these estimates and the associated calculations. Each of these figures is expected to be refined prior to closing of the Transaction, with full financial details to be presented in the management proxy circular to be filed in connection with the Transaction.

For the twelve months ended July 27, 2025, the Packaging Sector generated revenues of approximately $1.6 billion, operating earnings of approximately $157 million and adjusted operating earnings before depreciation and amortization of approximately $255 million⁽¹⁾. Post-Transaction, the Corporation expects a more streamlined profile with robust free cash flow generation.

For the twelve months ended July 27, 2025, adjusted operating earnings before depreciation and amortization is approximately $470 million for the Corporation, and approximately $215 million for the Corporation excluding the Packaging Sector⁽¹⁾. For the same period, operating earnings is approximately $276 million for the Corporation, and approximately $119 million for the Corporation excluding the Packaging Sector. For the same period, pro forma revenues for the Corporation excluding the Packaging Sector would have been approximately $1.2 billion.

The Corporation will update its outlook at or following closing to account for the Transaction.

⁽¹⁾ Please refer to the section entitled “Non-IFRS Financial Measures” in this press release for a definition of these measures.

Advisors

CIBC Capital Markets and RBC Capital Markets are serving as financial advisors to TC Transcontinental, and Stikeman Elliott LLP and Morgan Lewis & Bockius LLP are serving as legal counsel.

Source: TC Transcontinental

The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within may not directly reflect the thoughts or opinions of the staff of Printing Impressions.