Silgan Strategic Portfolio Announcement - SILGAN HOLDINGS INC

Good day and welcome to the Silgan Strategic Portfolio Announcement Call. Today's call is being recorded. At this time, I'd like to turn the call over to Alex Hutter, Senior Vice President, Strategy, and Investor Relations. Please go ahead. Thank you, and good morning, everyone. We appreciate you joining us on short notice today to discuss the transformative strategic portfolio announcement for Silgan Holdings. Joining me on the call today are Adam Greenlee, President and CEO, and Sean Fabry, EVP and CFO. Before we begin the call, we would like to make it clear that certain statements made on this conference call may be forward-looking statements. These forward- looking statements are based upon management's expectations and beliefs concerning future events impacting the company and, therefore, involve a number of uncertainties and risks, including but not limited to those described in the company's annual report on Form 10-K for 2025 and other filings to the Securities and Exchange Commission. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or applied in the forward-looking statements. In addition, commentary on today's call may contain references to certain non-GAAP financial metrics, including adjusted EBIT and adjusted EBITA. Reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics, can be found in today's presentation, which can be find in the investor relations section of our website at siliconholdings.com. With that, I'll turn the call over to Adam. Thank you, Alex, and good morning, everyone. Today's announcement represents a transformative step in Tilghens' portfolio evolution and reflects the disciplined value creation framework that has guided our company for decades. The combination of our metal packaging business and Trivium creates a best-in-class global platform, provides synergies, and establishes a clear path to separation. At the same time, our funding approach will increase flexibility for our faster-growing dispensing business, providing multiple pathways to accelerate shareholder value creation. First, we will further strengthen our global metal package business by investing in our markets and product offerings while generating a substantial synergy opportunity. Second, we unlock approximately $2.3 billion of cash for Silgan while retaining control and future upside created by the combined metal business. Third, we sharpen the strategic focus of both businesses with clearly defined operating priorities and capital structures aligned by a common value creation agenda. Turning to slide three, as most of you have seen before, our strategy has been consistent since day one and is focused on building and enhancing our positions in the markets we serve by meeting the unique needs of our customers and being the best at what we do. Our strategy centers on competitively advantaged businesses with strong free cash flow generation, and we deploy that cash flow in a disciplined, returns-based capital allocation process proven to create value for shareholders over the long term. This model provides flexibility to invest organically, execute targeted and disciplined acquisitions, or return cash directly to shareholders. The transaction we are announcing today applies the same strategy that is at the very core of what we do at Silgan. On slide four, you'll see that since 1987, we have completed 41 acquisitions, allocating approximately 45% of total cash deployed to M&A activities. Through our disciplined and balanced approach to capital allocation, we have delivered attractive shareholder returns, particularly through the realization of meaningful synergies generated through M&As, as well as organic investments, share repurchases, and dividends. Today, our metal containers business provides stability and strong free cash flow to our portfolio, while our dispensing and custom containers businesses provide attractive margins and exposure to premium specialty packaging products in faster-growing end markets. Together, these businesses generated approximately $6.7 billion of sales and $976 million of adjusted EBITDA. Turning to today's announcement on slide 5, Silgan has agreed to acquire Trivium Packaging in an all-cash transaction valued at approximately $3.4 billion. Trivium is a global provider of recyclable metal packaging products and a strong strategic fit with Silgan's food and beverage packaging businesses. As part of this acquisition, we intend to combine Silgan Metal Containers and food and leverage flat cap closures businesses with Triviam to form Silgan MCC. This transaction is structured without requiring meaningful incremental capital on behalf of Silgun's shareholders and will be leveraged neutral on a consolidated basis. To achieve this, funds affiliated with American Industrial Partners, or AIP, will contribute approximately $1 billion of cash and will own 40% of Silgan MCC common equity. Silgan PCC will be further capitalized with third-party debt financing, creating a distinct balance sheet intentionally designed to operate the metal business efficiently. Silgun will retain a 60% controlling interest and report the entirety of Silgun MCC as part of our consolidated financial results. At closing, Silgun we'll receive approximately $2.3 billion of cash proceeds. Our remaining wholly owned dispensing and custom containers businesses will be combined to form a newly named Silgun Dispensing Solutions segment. Turning to slide six, it is important to discuss why we are pursuing this transaction. On the metal packaging side, we are bringing together two highly complementary businesses with expanded scale, broader capabilities, and greater geographic reach. The combination strengthens our value proposition to customers while creating an attractive business with predictable earnings and strong cash flow. At the same time, dispensing solutions becomes a more focused growth platform. With additional flexibility, we can invest behind innovation, customer partnerships, attractive end markets, and disciplined acquisition opportunities. Another key element of the transaction is the synergy opportunity. Through a rigorous bottom-up diligence process, we have identified $225 million of expected synergies within Tilghan MCC. Importantly, we believe the complementary nature of these businesses creates a unique synergy opportunity that only Silgun is positioned to capture. The structure also creates meaningful financial flexibility. We retain control and future upside in Silgun MCC while increasing our capacity to invest behind growth opportunities and dispensing solutions and pursue additional value-creating opportunities over time. As I conclude this slide, let me address why now is the right moment for this opportunity. The combination comes at a point when customers increasingly value global scale, supply reliability, sustainability, and operational excellence. By bringing together two highly complementary businesses, we believe we are better positioned to meet those needs and create value in a way neither company could achieve independently. With that, I will now turn it over to Sean to review the transaction. Thank you, Adam. Turning to slide 7 and 8, the combination announced today values Sylvan's existing metal containers and closures business at approximately 8.1 times LTM EBITDA, and Trivium is being acquired at approximately 7.1x LTM Ebitda, or 4.8x, including expected synergies of $225 million. The acquisition of Triviam was funded through fully committed debt financing at Sylvan MCC and approximately $1 billion of cash investment by AIP. At closing, Silken MCC will be funded with net debt of approximately $4.6 billion, representing four times net leverage, inclusive of $225 million of expected synergies. As Adam mentioned, Silpen MCC would have an independent capital structure and remain a fully consolidated subsidiary of Silken. Following the transaction, dispensing solutions will maintain an independent balance sheet with initial pro forma net leverage of approximately 1.8 times, providing meaningful capacity to pursue attractive organic investments and disciplined acquisitions in our higher growth specialty packaging businesses. On a consolidated basis, the transaction is expected to be leveraged neutral to Silgan. Turning to slide 9, the Silgan MCC structure is fundamental to the transaction's value proposition, and AIP will be an important partner in executing our strategy. The firm's experience investing in and supporting manufacturing-focused industrial businesses complements Silgan's packaging expertise. Most importantly, the partnership creates clear economic and strategic alignment, and we benefit from improving Silgan MCC's performance, generating cash, and building long-term value. Our shared focus is clear. Close the transaction, integrate the businesses, deliver the synergies, and build a stronger global metal packaging business. Turning to slide 10, our current expectation is to achieve approximately 75 million of REM rate synergies in year one, 150 million in year two, and 225 million in year three. The opportunity is based on detailed bottom-up assessment of operations procurement and SG&A. Following extensive diligence, we are highly confident in both the magnitude and timing of the synergy opportunity. As a result of these expected synergies, the implied acquisition multiple for trivium decreases from approximately 7.1 times to 4.8 times adjusted EBITDA, creating a highly compelling opportunity to build an even stronger metal packaging business. Now, back over to Adam to talk more about the value creation opportunity. Thanks, John. And turning to slide 11, the structure unlocks meaningful scale and financial benefits today while preserving flexibility regarding how we position the portfolio over time. On a pro forma basis, Sylvan will generate approximately $10 billion of sales and $1.7 billion of adjusted EBITDA, compared with approximately $7 billion of sales, and approximately $1 billion of EBITD for our current business. Inclusive of the full $225 million of expected synergies, the transaction is expected to drive at least 15% accretion to adjusted EPS and free cash flow, underscoring the financial strength of the transaction. the agreement also establishes a pathway for Silgan MCC to become an independent public company through a tax-free distribution, and the timing will be governed by the progress of integration, synergy realization, business readiness, and market conditions. As shown on slide 12, the two businesses resulting from this combination will each have distinct financial profiles, products, markets, and priorities. Silgan PCC will have approximately $7.3 billion of sales and $1.2 billion of adjusted EBITDA, inclusive of the $225 million of expected synergies. Silgan dispensing solutions will remain wholly owned by Silgan, today generating approximately $2.5 billion of sales and $555 million of adjusted EHBDA, with a margin of approximately 22%. This structure allows each platform to pursue the strategy best suited to its opportunities, enabled by independent balance sheets and SILGEN's disciplined operating framework. Turning to slide 13, I'm excited about the opportunities this combination creates for our metal packaging colleagues as we further invest in this business, and I am delighted to welcome Trivium's talented team members. With over 100 combined manufacturing facilities, we will be uniquely equipped to better serve our combined customer base. Slide 14 highlights the highly complementary nature of these two businesses. Silgan brings principal positions in pet and human food cans across North America, along with global food and beverage closure capabilities. Trivium significantly expands our presence in Europe and adds established positions in aerosols and aluminum beverage bottles. Together, the businesses bring complementary products, capabilities, and geographic reach. while supporting continued investment in both the United States and Europe. Turning to slide 15, the metal packaging business remains anchored in the resilient global markets for food cans, food and beverage closures, aerosols, and aluminum beverage bottles. Key demand drivers include affordability of packaged food, pet food growth, sustainability of metal packaging, and opportunities to optimize the combined cost base. Metal packaging represents an attractive cash-generative business underpinned by long-term customer relationships, stable volumes, and consistent demand. As slide 16 highlights, the combined manufacturing network will be an important strategic advantage, with capacity to produce more than 27 billion cans and over 30 billion closures annually. That scale and reach will enhance our ability to serve customers locally while lowering our costs. In price-sensitive food and consumer markets, manufacturing efficiency is critical, and through operational excellence initiatives, the combined network creates additional opportunities to improve efficiency while maintaining service and supply reliability. Turning to slide 17, our priorities are clear. To integrate the combined platform, leverage the strengths of the combined businesses, and build long-term value. Following integration and synergy realization, we will evaluate a separation at the time we believe will maximize value for our shareholders. We will apply Silgun's proven operating discipline and accountability to each priority. Successful execution will strengthen earnings and cash flow while increasing Silgun MCC's strategic value. Turning to slide 18, I'd now like to turn our focus to Silgun dispensing solutions, which will remain 100% owned by Silgan. The transaction further enhances our ability to invest in these faster growing, higher margin businesses, while enabling our leadership teams to remain focused on innovation, customer partnerships and discipline growth. Today, this business employs more than 11,000 team members and operates 66 manufacturing facilities with approximately half of sales in North America, 34% in Europe and 16% across the rest of the world. The portfolio includes fragrance and fine mist dispensing systems, health care and drug delivery products, trigger sprayers, and plastic containers, all of which provide critical functionality at a low overall percentage of the product cost in categories that highly value innovation, precise performance, quality, and close customer collaboration. Turning to slide 19, over the last decade, we have invested significantly in our dispensing business through acquisitions and organic investments, building a differentiated specialty packaging platform with attractive margins. We've expanded our capabilities, deepened customer relationships, and strengthened our positions in higher growth end markets. The result has been greater scale, improved profitability, and a strong track record of execution. Looking ahead, we see additional opportunities to continue investing through innovation, customer partnerships, and targeted acquisitions, and the financial flexibility created by this transaction further enhances our ability to pursue those opportunities. Turning to slide 20, Silgan Dispensing Solutions participates in several attractive end markets with multiple sources of organic growth. In healthcare and pharma markets, we see high single-digit growth potential supported by rising healthcare spend and expansion of drug delivery routes, where our precision dosing, clean room manufacturing, and product development capabilities are important differentiators. In fragrance, beauty, and personal care markets, we see mid-single-digit growth potential as customers seek product differentiation and innovative dispensing formats. In home care and lawn and garden markets, we see low single-digits growth potential, where our products deliver the durability, functionality, and convenience consumers value. Across each of these markets, the common element is innovation. Our products are often critical to how a customer's product is delivered, used, and experienced, which creates great opportunities for longstanding partnerships and supports customer growth initiatives. Moving to slide 21, dispensing solutions has a proven track record of disciplined capital deployment. Since 2017, Silgan has invested more than $4 billion in these businesses through acquisitions and organic investments. expanding our positions into dispensing products, healthcare packaging, drug delivery systems, medical devices, and custom containers. Our disciplined acquisition model is selective and returns-focused, targeting businesses that add differentiated capabilities, strengthen customer relationships, expand our presence in attractive end markets, and create opportunities for operating improvement. Turning to slide 22, our strategic priorities in this business have not changed and are focused on high-value products in higher growth markets, including specialty dispensing technologies, medical devices, and healthcare and pharmaceutical packaging. With greater focus and financial flexibility, dispensing solutions will be positioned to compound earnings and cash flow over time through balanced organic investments and disciplined capital deployment. Turning to slide 23, we remain committed to our business model. Today's transaction builds and enhances our position in both Silken MCC and dispensing solutions. The funding structure and balance sheet reallocation approach to this transaction will optimize free cash flow, allowing us increased flexibility to invest in the fastest growing parts of our business. Taken together, we are convinced this transaction will create sustainable long-term value for shareholders. As we look forward from here, Silken Holdings is expected to generate approximately $10 billion in sales and $1.7 billion of adjusted EBITDA, including $225 million of expected synergies, with a meaningful increase in earnings and cash flow attributable to this transaction. In closing on slide 24, we see this transaction as a transformative development that accelerates Silgan's portfolio evolution. It aligns the right businesses and resources around distinct opportunities, and we are confident in the strategic logic of the combination with our metal packaging businesses. The flexibility and opportunities that can be realized in our dispensing solutions business, and the benefits this transformative strategic structure can deliver to our customers and shareholders. With that, I'll turn it back to Katie to open the line for questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad if you're using a speakerphone please make sure your mute function is turned off to allow your signal to reach our equipment if you find your question has been answered or would like to remove yourself from the queue please press star 2 once again star 1 for question questions we'll take our first question from Gansham Panjami with Baird yeah hi good morning congrats on all the activity announced this morning I guess First off, Adam, on slide 11 on the future intended separation that you called out, was there any consideration to just split the company as it stands today versus the transaction and the multi-step that you announced? And if so, why is this the better path? Is it just because of the increased scale that the standalone entity would give you in the future? Was that the consideration? Thank you. Well, sure. Sure. Thanks, Gautam. You know, first of all, we're really excited to announce the transition here, the transaction and the creation of a premier global metal packaging platform. You know for us, there's a couple things to consider so that one of the really key elements of this transaction is that it's leverage neutral for Sylvan and our shareholders did not have to deploy a meaningful amount of capital in order for us to achieve this. and we maintain our flexibility to continue to grow out the business and execute our strategic priorities on the dispensing solution side. So I think when we think about the timing and whether the kind of platform that we have described and the timing we've described was the right platform, we absolutely believe it is. We think the first thing we need to do, Gancham, is bring these businesses together. We need to deliver those synergies, and we need to create that value for our shareholders. Again, we're talking at least 15% EPS accretion for our shareholders without deploying meaningful capital. And then once the business is ready, once the markets are tuned to this transaction, that's when the time for separation will occur. And we feel confident that that's the right path forward. Great. Thanks for that. And then as it relates to your comments on dispensing closures and the focus there in terms of growth, et cetera, just to clarify, Adam, would you consider future acquisitions for that segment as you deliver synergies associated with the transaction announced on the metal side, or is it independent of that as it relates to being opportunistic, which you have been in that segment over the past decade? Yeah, I think it's really interesting, Ganshan, because I think with the structure that we have today and the reallocation of the balance sheet, you know, we think that dispensing solutions at close will be approximately 1.8 times levered the way we're reallocating the balance sheets. so we think there's plenty of opportunity the pipeline remains strong so it has nothing to do with the pipeline or any other thought on dispensing solutions other than we had this really unique opportunity to create this this premier global metal packaging business with trivium and you know our our efforts and focus on continuing to expand the portfolio as we've been doing for the last decade and dispensing solution has not changed okay very good thank Thank you so much. We will take our next question from George Staffis with Bank of America. Hi, everyone. Good morning. Good luck with the transaction. Thank you for all the details. I had three questions. I'll ask them in sequence to be time efficient. Adam, I guess, did anything change in terms of how you evaluated the existing business at Silgan? Silgan has always been a holding company structure where metal basically funded the growth of dispensing. Has something changed in terms of how you view metal or, for that matter, has the valuation you've been trading at in more recent years and its impact on your cost of equity changed how you look at the business and what you think you need to do going forward? That's number one. Two, I know the answer is going to be yes, but I want to know why. Why do you think that you have the bench across the team and the appropriate cultural fit? between Trivium and Silgan? And then last, can you talk about how the composition of the synergies changes with your three-year schedule? And just clarification, that EPS accretion, that's before the minority interest, right? So obviously, 15% would not be the number. It'd be a lower number if I strip out minority. Thank you, guys. Good luck. Sure. Thanks, George. So really, no, nothing's really changed at Sylvan. I mean, as I kind of said earlier, our strategy has really been the same since day one. It's about building and enhancing competitively advantaged businesses in the markets we serve. And we take a lot of pride in being the best at what we do. So I think as we've been growing out our dispensing portion of the portfolio over the last decade, I think we've we've pretty clear that at some point, it probably makes sense that these two businesses could stand on their own. You've got to, in our metal packaging portfolio, you've got an incredibly stable, high-powered cash generative business that is of scale and of magnitude that it is a premium portfolio part of our business at Silgan. And I think what we've grown out in dispensing is a faster growing, higher margin part of Our Portfolio that just looks a little bit differently. And I think when the scale of that business got to such a point that we believe it could stand on its own two feet, a separation was probably likely. Clearly, I think we believe there's a dislocation in the value of the equity. So, you know, when you think about us maybe putting equity into this deal, you Know, that did not make any sense at current valuations. And I think, you Now, in our opinion, a fair valuation of Stilgun metal container business and metal packaging business at eight times in this transaction, 8.1 times, and triviums at 7.1 times made perfect sense to us. And we've got a great partner at AIP that is completely aligned on strategy, valuation, and priorities to execute. Maybe your second question, George, on kind of our bench. And, you know, I mean, we take a lot of pride in having really good teams in the field. You know, we've Got our operating portfolio companies and a small group here at Holdings, as you know so that whole co-structure has not changed i think one of the really interesting things here about this this acquisition is that you know as with most you've heard us talk a long time george about um we've known these these properties for a very long time and we're very familiar with them you know i've had the great luxury of working with tony allitt for my 22 years at silgan and um you know he and i and others on our team have been looking at this business for a very long time. I'd say he probably knows it as well, if not better than anybody else. And he played a really important role for us, helping us through this process of diligence. And he's going to play an active role in overseeing and supporting management as we go forward. So he'll help pull those two cultures together with the rest of the Sylvan team. And we're really excited to have him support the business and help bring these two businesses together. And I'll let Sean cover the synergy question. Yeah. So, George, thanks for the question. I mean, if you look at our track record here, I think it's a proven track record on M&A and creating value and specifically capturing synergies. We've done 41 acquisitions in our history. And as we've built out our dispensing solutions business, we've deployed $3.5 billion into M&As since 2017. And on average, we have achieved roughly a two-times multiple buy-down through those transactions. And this is very consistent with that. It's around a two times multiple buy down. Combined revenue for the business, you're talking a $7 billion business with Silicon MCC, so it's roughly about 3% energy side. And then the deep understanding that we have around the Trivium business also helps reinforce our belief here, complemented with the extensive diligence we've done on the transaction. So we feel pretty confident about our synergy plan. It has been built from a bottom of up approach, initiative by initiative, and we're very highly confident that we'll be able to deliver on the magnitude and timing of that plan. With respect to the EPS question, it is after minority interest, so it does factor in the 40% AIP minority interest. And it also includes the prevailing forward curves for interest,so it reflects the current higher interest rate environment that we're in at the moment. Yeah, respectfully, no one has a better track record at this stuff than Sylvan, so we wish Well, in that regard, just composition on the synergy, that's what I was asking. Is it more SGA up front and then procurement, or how does it work? Thank you, guys. Good luck in the closing. Yeah, it's over. I'll just jump in on that. It's roughly 20% SG&A, 30% procurement, and then 50% operations. And I think the way to think about that would be evenly over the three-year period for each of those. Got it. Thank you very much. Thanks, George. We will take our next question from Nat Roberts with Raymond James. Hey, Adam, Shawn, Alex, good morning, congrats on the news. Shawn, I believe you just kind of front ran some of my questions. You said the interest rate is based on the current curve. Any considerations with maturities that are coming due in the next couple years and how do you view the path of the leveraging given any other maturities coming due? Yeah, good question. So we have flexibility with how we use the $2.3 billion, and so we will use it to pay off debt. What specific debt we pay down, I think we'll make that decision as we get closer to close. In terms of the debt itself, it is fully committed. We expect to incur $4.9 billion upon the closing, which is roughly a four times leverage for Silicon MCC after considering the run rate synergies. And just to give you a sense of interest rate it's probably around seven percent at the prevailing forward curves today and then matt just one thing to remember this is leveraged neutral to silicon and consolidation to your question on on deleveraging so the the combined entity will generate significant free cash flow the spending solutions business generates really good free cashflow as well but it's leveraged neutral out of the gates excellent appreciate all the color there um make them the remaining dispensing or sorry existing still dispensing segment I think metal closures is coming out of that if so what was the mix in dispensing maybe over the last 12 months and excluding that portion how are margins and growth compared to the profile of what it will be going forward any disenergies or overhead considerations that will impact that dispensing business? Broadly speaking, you know, we don't view it as, I mean, number one, it's still a 60% subsidiary of Silgan. So it's under the Silgan umbrella. So we're not anticipating any dis- synergies as we think about this. And really, when you think about our flat cap closures business, it really was focused on food and beverage products. So it has growth rates that are much more similar to the growth rate that we're talking about in some of our canned food applications, et cetera. And I think Alex has a little more detail. Yeah, so the end market breakout is close to 50% on the fragrance, beauty, personal care side of the business. And then home care, lawn and garden, about 20%. Healthcare is north of 10%. The balance is kind of food dispensing. Excellent, appreciate it. I'll go there. Thank you. We will take our next question from Keaton Memtora with BMO Capital Markets. Good morning and congratulations. Just on this future tax-free separation, I'm just curious what sort of operational financial milestones that you have in mind that need to be achieved before you consider a spin? Is it more based on synergies? Is it based on where the leverage sits two, three years out? How would you have us think about that? Yeah, I think the very first priority is going to be about capturing those synergies. And I think that's probably the first metric to really think about and probably the most important one as far as that ultimate separation will take place. Because, again, A, we're bringing the companies together, so the integration is really important. But we are laser focused on executing these synergies and creating that value for our shareholders. And then, you know, once we've done that, we'll take a really hard look at business readiness and market conditions and move forward with the separation at the time we really do believe creates the most value for our shareholders. Understood. And then do you have any sort of preliminary estimate for us in terms of cost to achieve these synergies? Yes. Yes. So we would expect about a one-to-one ratio with the synergy itself, so somewhere in that $225 million range with one-time cost. Inevitably, that's going to be front-loaded a bit relative to the capture of the synergy, so I think of it about $100 million in the first two years and the balance in the third year. Got it. That's very helpful. I'll turn it over. Good luck. Thank you. Thank you, we'll take our next question from Hilary Cacanando with Deutsche Bank. Hi, thank you for taking my question. So Trivium, you know, meaningfully increases your European exposure and, you know, introduces categories or expands your categories in aerosol and aluminum bottles and things like that. So if you look at the combined portfolio, where do you see the greatest opportunity to gain share? You know, would it be expanding existing Trivion products? products with Sylvan customers or expanding Sylvan products with Trivium customers or just simply improving the economics of the existing businesses? Got it. Well, number one, Hillary, we do believe this is a highly complementary combination of two businesses. And I think you're right. What Sylvan brings to the equation here is a terrific U.S.-based food cam business. And we've got our food and beverage closures business that we'll be going in. Trivium is much more focused and has a much larger presence in Europe. So you kind of get that geographic benefit of both. And as we think about our increasingly global customers, we think that's a great way to serve a global customer base. And then with Triviam, you're right, we bring in aerosols, which we find is a very attractive business and have seen some nice growth in the aerosol business over the last several years as well, particularly on the aluminum side. And then we have the aluminum bottle business as well that, you know, Silgan doesn't participate in either of those markets I just mentioned. So it's more about, you know broadening the basket of the complementary products that we sell and taking those to market on a global basis. One thing to add, by bringing these two organizations together, we're creating a global premier packaging, a metal packaging business that's uniquely positioned to champion in the benefits of metal packaging, and ultimately with the goal of expanding the pie, right, of overall metal packaging globally out into the future. Got it, thank you. And then, I don't know if I missed this, but I was wondering, you know, just given the attractive acquisition multiples and the magnitude of the expected synergies, why was it so important to bring AIP into this instead of just, you now, rather than retaining 100% of the economics? Yeah, good question. I think it's important to remember, and kind of going back to Adam's point, there's some key transaction attributes here that you can only really have with bringing a partner into the equation, and that's things like being leverage neutral. We're not deploying a meaningful amount of shareholder capital. We retain the ability to capture a significant portion of the value creation this combination is creating, specifically with the 15% AGS accretion estimate. We're able to unlock financial flexibility for our dispensing solutions business. And it also provides a clear path for separation. And if we would have done this alone, a lot of those attributes would not be on the table. So we think, you know, comparing versus the alternative, this is really the right path for Sylvan and for our shareholders to create the most value. And I think, as I said earlier as well, you know, with AIP, we've got a completely aligned partner, both from a strategy and kind of an economic interest in in the Sylvan MCC business and and feel great that we're still going to be able to execute on our strategic priorities and our dispensing solutions business at the exact same time because we've created that financial flexibility that Shawn described in his comments got it great thank you so much and congratulations thanks Hillary we'll take our next question from Anthony Petinari with Citi Good morning. Just following up on Keaton's question on the path for MCC to become a standalone company. So if this closes in mid-27, as you anticipate, and you have a three-year synergy ramp, do you need to get to kind of the end of that? You know, should we think about the separation as sort of happening in that like a 20-30 time frame or could this happen, you know, quicker? Obviously, not holding you to anything, but just trying to understand if this is, you know, something where you really have to get to kind of the end of that synergy timeline. Sure. Well, and maybe one of the only thing is or one ofthe most important things is, Anthony, is that, I mean, we truly believe that only silicon can deliver these synergies. And, you know, I mean, that is the focus for value creation here right out of the gate. So kind of think about, you Know, the implementation of the business, the capture of those synergies that that's really a high priority for year one, and we're not going to be distracting the business in any way outside of delivering on those two items. I think once we've delivered synergies in year one once we, you got a clear pathway to your two synergies we are talking about an accelerated process to to separate this company and and take advantage of that tax-free distribution that we've talked about got it got it no that's very helpful um and then you know slide 14 you know given you have some overlap in in food cans can you just talk about uh you know confidence and regulatory approval the approvals that are required, kind of the timeline, just any further thoughts on that? Sure. And again, I think what that slide also shows you is, I think it validates our statement that we're creating the premier global metal packaging platform in the packaging industry. So, look, a lot's changed, Anthony, over the last 10 years. The competitive environment's just different. We've had dynamics where we've got alternative packaging formats whether it be fiber based or even resin based whether it's pouches or or rigid packaging you know there's a lot more competitive products that not only are available in the market that our customers use as well i think another significant change that's occurred over the last several years is with you know kind of tariff related activity and we do see an influx of imported filled goods into the north american market in particular and so you know we We think the competitive dynamics in the environment have just changed in the U.S. in particular. And then we take a step back and we look at these two businesses and just think they're highly complementary. You can see, again, where our overlap is, certainly in the food can side. We're much more present in the US versus Europe for the Sylvan business, much more Europe versus the US for Trivium. We've got the additional products that we bring in our closures business for food and beverage closures. We like the fact that they've got aerosol and aluminum beverage bottles as growth portfolios as well. And maybe the last point I give you is just we do think this is really good for consumers. You know, it's going to lower the overall cost for critical sources of low-cost nutrition for consumers that need it most. It does allow Sylvan to be a little more relevant with our suppliers on a global basis, as the global supply base has changed as well. As a reminder, you know, for 10-plate products, about 80% of 10-plates consumed in the United States is produced outside of the United States and imported. We'd love to have an opportunity to have those conversations about supporting American jobs and supporting American manufacturing with what we do at Sylvan and as part of this combination. And finally, just, you know, we believe that the combination creates more value together than either one of these two companies could have created on their own. Okay, that's very helpful. I'll turn it over. We'll take our next question from Arun Vishwanathan with RBC Capital Markets. Great, thanks for taking my question. Congrats on the transformative acquisition here. I guess just first off on the synergies, so I think you've identified 225 in total, half of which looks like they're in the operations side and 30% in procurement. I guess what's going to drive that? Is there going to be any changing to maybe some of your supply contracts as far as, you know, pass-through provisions, and how does that work, especially in Europe? Is there an opportunity to maybe bring some of the CILGN expertise on that front? Is that really what's driving and resulting in those synergies? Thanks. Thanks, Arun. Look, as Sean has said earlier, I mean, this is a very rigorous bottom-up kind of roll-up of these synergies, and particularly on the procurement side. Number one, you know, we're going to remain separate companies here for, you now, foreseeable future through call it mid-2027 which is our expected kind of uh close date and really you know from a supplier perspective you know we we think that it's you know very focused on on kind of the combined entity having some greater scale um we think there's a lot to learn on both sides of this equation we think we've got two really good uh companies coming together and we'll share those best practices when we're able to, but, you know, don't anticipate anything prior to that. But it's really, there's a lot to learn and there's going to be a lot more to learn once we're unable to finalize and close the transaction. Thanks for that. And then if I could just ask, it sounds like, you did mention that each business will be in a better position to allocate capital as it deems the best use. So I guess is there an implicit argument there that currently the operating structure is somehow suboptimal in that when you go forward, you will have the dispensing business that's higher growth, but it may not necessarily still have the same access to um you know free cash flow generation from mcc uh just curious how that works and i guess does that when you've gone through that analysis how much in returns uh increase does it you know potentially generate is that is that part of the rationale for the transaction thanks sure i think we'll ham and egg an answer for you if that's okay um you number one i would say you know nothing's change for Silgan. So, you know, the ability to allocate capital, you know, very simply migrates towards the best returns that can be generated for the deployment of that capital. And, you know, that continues for both Silgan MCC and for dispensing solutions. So it's not that we couldn't allocate capital to dispensing solutions and we did this transaction for Silgun MCC. We think it actually enhances our ability going forward to to continue to allocate capital. So, you know, we feel great about this transaction. And really, again, nothing's changed from a strategic standpoint, and how we view the allocation of capital. And I think it's actually optimal allocation of capital as we look at it today. Yeah, and I think, you Know, it's important to remember, this is a leverage neutral transaction. So when we think of it from a silicon perspective, we're not really changing the overall net leverage of the business. And so that kind of plays into what Adam's comments were, is that we really haven't fundamentally changed the way we view capital allocation. We still will continue to deploy a disciplined returns-based capital allocation model, deploying capital towards the alternative we see creates the most shareholder value. That could be the dispensing solutions business. It may not. But nothing's changed in regards to the way that we're thinking about how we're going to deploy capital going forward thanks we will take our next question from anosha shah with ubs hi good morning everyone congratulations on the deals announcement um my question is does this announcement open up any opportunity for renegotiation of contracts um not necessarily yours but maybe trivium Good morning. No, we don't think so. Again, I think it's really important. I think Trivium has done an excellent job in managing and running their business. It's performed well and consistently over the last five years. I think when we have the opportunity to do a deeper dive on these best practices, and we'll be sharing those best practices and learning and implementing best practices across the entirety of the franchise, I think maybe just one comment for you. You know our business well, and on the metal container side, we kind of came out of self-manufacture. We've had very long-term contracts in our U.S. and North American business. Europe's always been a little bit shorter from a contract length perspective and I think what we've seen over the last several years is those those annual agreements moving to kind of more three five year kind of contracts and so I believe that's already happening in Europe but you know a lot of best practices to share and a lot to learn going forward right thank you and then I hear all comments on capital allocation, but is there any way to give a finer point on CapEx as a new Silgan MCC business, like what you expect annual CapEx to be there? And then I'll turn it over. Thank you. Yeah, sure. Sure. Good question. So we really don't fundamentally see much changing with respect to the CapEx rate of our metal business today versus the combined business going forward. So I think of it around 3% of total sales for CapEx for Silgan, MCC. Perfect, thank you. As a reminder, Star 1, if you would like to ask a question, we'll pause for just a moment. At this time, there are no additional questions in queue. I'd like to turn the call back over to Mr. Grindley for any additional or closing remarks. Great. Thank you very much, Katie. And thanks, everyone, again, for joining us on short notice about this strategic transformative acquisition for Sylvan Holdings. And we look forward to reviewing our earnings with you next week. Thank you. That will conclude today's call. We appreciate your participation.