Matthews International Acquires Schawk

PITTSBURGH—March 17, 2014—Matthews International, a designer, manufacturer and marketer principally of memorialization products and brand solutions, has signed a definitive agreement to acquire Schawk (SGK). SGK is a leading global brand development, activation and brand deployment company. SGK reported sales of $443 million for 2013 and has approximately 3,600 employees in over 20 countries.

Under the terms of the transaction, SGK stockholders will receive $11.80 cash and 0.20582 shares of Matthews' common stock for each SGK share held. Based on the closing price of Matthews' stock on March 14, 2014, the transaction represents an implied price of $20 for each SGK share and a total enterprise value of approximately $577 million. The exchange is intended to qualify as a tax-free reorganization on the share portion of the purchase price.

The combination is ultimately expected to achieve $35 million to $45 million in annual cost-savings synergies and is expected to be accretive to adjusted (non-GAAP) earnings per share in the first full fiscal year following the closing of the transaction, excluding non-recurring transaction-related expenses and costs to achieve synergies.

The transaction is expected to close in the quarter ending September 30, 2014, subject to approval by the shareholders of SGK, the receipt of regulatory approvals, and other customary closing conditions. Members of the Schawk family and various Schawk family trusts, who collectively own approximately 61 percent of the common stock of SGK, have agreed to vote in favor of the merger.

For over 100 years, Matthews has been a leading provider to the packaging industry with the company's Brand Solutions products and services. Clarence Schawk, who founded SGK in 1953, and David Schawk together have built a leading global provider of brand development and brand deployment to many of the world's largest companies and brands. This merger builds upon the legacies of both companies and will create a global leader in brand solutions, which includes brand development, activation, brand deployment and delivery.

"SGK's geographic and product positioning is uniquely complementary to Matthews," stated Joseph Bartolacci, president and CEO of Matthews. "Our teams are also highly complementary and have exceptional talent. With their North American presence and Asian competencies, combined with our European strength and merchandising capabilities, this alliance will create compelling new opportunities for our clients and employees in all of the markets we serve. Through integration efforts, we expect to achieve significant cost-savings synergies, building an even stronger and more competitive business in the global brand solutions market, which is also expected to drive revenue growth. We have a well-defined implementation plan and process for the achievement of these cost savings. Based on SGK management-adjusted (non-GAAP) EBITDA of $55.3 million for 2013 and our expected range of synergies, the incremental annual adjusted (non-GAAP) EBITDA resulting from this transaction could be up to $100 million post‑integration."

Bartolacci further commented, "David Schawk has agreed to lead the combination of SGK and our comparable Brand Solutions businesses. SGK has done a tremendous job of establishing their brands, including Schawk!, Anthem and Brandimage. The combination of these brands with our well-established Matthews' brands will all be branded under the SGK name. Under his leadership, I am confident that we will continue to expand our global reach, further strengthen our relationships with branding clients and achieve our synergy objectives. In addition, David is expected to become a member of Matthews' Board of Directors upon the closing of this transaction."

"We are excited to be partnering with Matthews International and look forward to capitalizing on the opportunities this transaction will create," added David Schawk, CEO of SGK. "With Matthews International's trusted reputation in Europe and ours in North America, Europe and Asia Pacific, this alliance is expected to form a stronger global offering and provide greater value to our clients and the markets we serve, along with enhancing our ability to expand into key brand-development markets. Together, we will be a global market leader, with anticipated annual revenues of approximately $850 million for the combined applicable Brand Solutions businesses. We also are extremely pleased that this transaction will provide our stockholders significant value for their shares, along with the opportunity to participate in the combined company going forward."

Evercore Group, LLC acted as financial advisor to Matthews, with Cohen & Grigsby, P.C. serving as legal counsel.

Source: Matthews International.