SGK Brand Solutions, the packaging prepress agency formerly known as Schawk, is being sold by owner Matthews International to a new entity created by affiliates of global brand agency SGS & Co. A statement from Matthews International said that the new entity will ‘combine SGK and SGS’.
Under the terms of the proposed deal, Matthews will realise an upfront consideration of $350 million (£284.6 million) and will receive a 40% interest in the new entity. It will also retain the German rotogravure packaging business and other related investments that are currently within the SGK Brand Solutions reporting segment.
The new entity incorporating SGS and SGK will have an enterprise value of around $900 million (£731.7 million), according to Matthews International’s statement. It will be led by SGK president Gary R. Kohl as CEO, with Matthew T. Gresge, currently CEO of SGS, becoming executive chairman of the board, in addition to working closely with Mr Kohl to lead the integration of the newly combined businesses.
‘Today’s announcement represents the culmination of a multi-year process to transform SGK,’ said Mr Kohl. ‘By combining with SGS & Co, we’re accelerating the work we began on our own and better positioning the company to deliver the cutting-edge solutions our clients demand and to serve the enormous market for marketing execution services. We look forward to joining forces with SGS & Co and helping even more companies create amazing brand experiences.’
The potential sale of SGK has been welcomed by Barington Capital Group, which owns 1.9% of Matthews International Corporation. It described the SGK business segment as a ‘poorly performing business’, which had resulted in a write-down of more than $266.2 million (£216.4 million) under the ownership of Matthews. Barington had previously called for changes to Matthews’ management and board of directors, urging it to simplify its portfolio. Selling SGK highlights ‘one of the many value creating opportunities available’ for Matthews’ shareholders, it said.
SGS & Co operates in more than 30 countries, comprising SGS (production) and Marks (creative), delivering design, graphic services, production, technology and process optimisation. SGK Brand Solutions’ website claims the business operates in 24 countries, with an annual revenue of $548 million (£445.4 million).
