Ranpak acquired by One Madison

One Madison Corporation, a special purpose acquisition company listed on the New York Stock Exchange, agreed on 13 December 2018 to combine with Ranpak, acquiring it from Rhône Capital, which exited in full. The transaction carried an enterprise value of $1.1bn, an EV/EBITDA multiple of 10x–18x on expected 2019 adjusted EBITDA of $50–100M, and brought the packaging maker to the public market: on closing, One Madison was to be renamed and continue trading under a new ticker. Completion, expected in spring 2019, required approval by One Madison’s shareholders and regulatory clearances. The consideration was funded with 300 million dollars held in One Madison’s trust account, around 407 million drawn from a 650 million committed debt facility provided by the merchant banking division of Goldman Sachs, and some 292 million of committed equity from its anchor investors, alongside a 142 million private placement of common equity at 10 dollars a share. One Madison’s investors included the family offices of Jonathan and Robert Soros and entities managed by Blackstone Alternative Solutions. Founded in 1972, Ranpak sells machines that convert kraft paper into cushioning and void fill at the point of packing, then supplies the paper those machines consume. The equipment is placed with customers who use it exclusively with Ranpak paper, which makes the consumables the source of recurring revenue and gives the machine a payback of around fifteen months. It served approximately 30,000 end users in more than 40 countries through an installed base of over 90,000 machines, sold through exclusive distributor relationships, and employed around 550 people. That model produced adjusted EBITDA margins of [members only] and converted more than 80% of EBITDA into free cash flow over the preceding three years, with revenue growing above 7% a year over fifteen years. Roughly a third of sales came from e-commerce, and demand was supported by the substitution of paper for plastic in protective packaging, a shift driven by both regulation and customer preference. Omar Asali was to become executive chairman of Ranpak, with Mark Borseth continuing as president and chief executive. Citi advised One Madison, with Credit Suisse and BofA Merrill Lynch as capital markets advisers and Davis Polk & Wardwell as legal counsel. Goldman Sachs acted as exclusive financial adviser to Rhône Capital and Ranpak, with Sullivan & Cromwell as legal counsel.