Target Information

The Sterling Group has recently formed a new plastics recycling platform named Evergreen by carving out Greenbridge Packaging's recycling division and acquiring the Riverside, California facility of CarbonLITE through a 363 bankruptcy process. This strategic merger positions Evergreen as one of the largest PET recyclers in the United States, with the capability to collect and process over one billion post-consumer PET bottles annually. Evergreen's facilities, located in Clyde, Ohio and Riverside, California, specialize in cleaning, sorting, washing, and grinding plastic bottles into recycled PET (rPET) flakes and pellets, which are essential for bottle manufacturing and supporting sustainable packaging initiatives.

With an increasing focus on environmental sustainability and the demand for recycled content in packaging, Evergreen stands poised to assist its customers in meeting legislative requirements and heightened consumer expectations. The company's plans include doubling its food-grade rPET manufacturing capacity at its Clyde facility over the next year, demonstrating a strong commitment to expanding its operations and enhancing recycling capabilities.

Industry Overview

Evergreen operates within the rapidly evolving plastics recycling industry, which has gained significant momentum in the United States due to mounting environmental concerns and regulatory pressures. Recent legislation mandates increasing levels of recycled content in packaging, pushing brands to incorporate more sustainable practices in their production processes. As consumer awareness about plastic waste continues to grow, there is an urgent call for solutions that reduce packaging's environmental footprint.

The United States has been facing challenges with plastic waste management, prompting state and local governments to implement stricter recycling regulations. Industries across the board are responding by investing in advanced recycling technologies that not only enhance material recovery rates but also improve product quality. As such, organizations focused on sustainable practices are uniquely positioned to thrive in this dynamic landscape.

In this context, the market for recycled materials is expanding. The demand for recycled PET is on the rise as companies strive to achieve their sustainability goals and reduce reliance on virgin materials. Evergreen's operations align perfectly with this trend, addressing market needs while also contributing positively to the circular economy.

Furthermore, innovative technologies and methodologies are continually enhancing efficiency within recycling facilities. Evergreen's use of advanced robotics and state-of-the-art manufacturing lines signifies a commitment to not just meeting but exceeding industry standards and expectations.

Rationale Behind the Deal

The acquisition of Evergreen and the Riverside facility aligns with The Sterling Group's investment strategy aimed at building strong platforms in high-demand industries. By creating a consolidated entity that merges the strengths of Greenbridge Packaging and CarbonLITE, Sterling enables Evergreen to leverage operational synergies that will drive growth and enhance market share. This strategic move capitalizes on the increasing consumer and corporate pressure for sustainability, thereby positioning Evergreen favorably for future expansion.

Moreover, the deal reflects a broader commitment to environmental stewardship, recognizing both the economic potential and the social responsibility that accompanies business operations in the recycling sector. The investment stands to yield substantial returns while simultaneously contributing to a more sustainable future.

Investor Information

The Sterling Group, founded in 1982, is a private equity firm that focuses on operationally-driven investments in basic manufacturing, distribution, and industrial services companies. With a robust track record, Sterling has sponsored the acquisition of 58 platform companies, facilitating numerous add-on transactions that collectively account for over $14.0 billion in deal value. The firm currently manages over $4.0 billion in assets, demonstrating significant capital resources for future growth initiatives.

Emphasizing a hands-on approach, Sterling partners with management teams to implement operational improvements and drive strategic growth. The firm's extensive experience in building products distribution positions it well to support Evergreen's expansion plans while maximizing efficiency and profitability.

View of Dealert

The establishment of Evergreen through the partnership of Greenbridge Packaging and CarbonLITE represents a strategically sound investment by The Sterling Group. By consolidating resources and leveraging the combined operational expertise, Evergreen is positioned to become a key player in the accelerating PET recycling market. This acquisition not only broadens Sterling's investment portfolio but also aligns with global sustainability initiatives.

The anticipated increased demand for recycled materials reinforces the strategic rationale for this investment. As legislation pushes for more sustainable packaging solutions, Evergreen's capabilities in producing food-grade rPET will meet growing market needs, thus enhancing its long-term viability and attractiveness as an investment.

Furthermore, given the projected growth within the recycling industry, the investment in Evergreen is expected to yield strong returns as the business scales operations and amplifies its market presence. Combining cutting-edge technology with a commitment to sustainability, Evergreen has the potential to redefine the recycling landscape while delivering profitability.

In conclusion, the Evergreen acquisition is an astute investment backed by robust industry trends and operational synergies, making it a promising addition to The Sterling Group's existing portfolio.

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