This time, it's my pleasure to hand over to Mr. Guido Pickert, Vice President, Corporate Investor Relations at Gerresheimer AG. Please go ahead, sir.
Thank you, operator. Welcome to our call regarding our acquisition of Bormioli Pharma, a pharmaceutical company with a highly complementary product portfolio, which we announced this morning. Please note that recording will be made available on our website sometime after this call. With that, I hand over to our CEO, Dietmar Siemssen, to run you through the rationale of the acquisition together with our CFO, Dr. Bernd Metzner. Dietmar?
Yeah, good morning, everybody. We are all sitting here after a long and intense night. The call is actually to give you some more insights into the acquisition of Bormioli Pharma. This actually will accelerate our transformation to system and solution provider. The page says it in principle, text, page three here. The acquisition of Bormioli Pharma is strengthening our system integration capabilities. It's accelerating our transformation. Bormioli Pharma is for us, highly strategic and complementary with our existing portfolio and also worldwide footprint. Generates profitable growth track record, attractive margins and cash generation accretive, that are accretive to our margins and earnings per share trajectory. Also, substantial synergies accelerating value creation for shareholders. And what we will do, we will initiate a strategic review to explore options for our now new molded glass powerhouse. We will come to more details over the group of the presentations.
It's delivering on our vision, strengthening breadth of our platform, accelerating the transformation journey, as mentioned. Now, I take, I take on. Dietmar zooms later into the strategic fit of the acquisition of Bormioli Pharma. Looking at the financials, Bormioli is expected to generate around EUR 370 million of revenues and an adjusted EBITDA margin of around 21% in 2024. In addition-
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Operator?
Okay, ladies and gentlemen, you may please. The connection with the speaker has been reconnected. You may please go ahead with your presentation.
Thank you.
Bernd, I would recommend that you just repeat your chart.
Yeah, yeah, perfect. For this, it's maybe too early for our system, 9:00 A.M., so I repeat basically slide four again. As mentioned, Dietmar zooms later into the strategic fit of the acquisition of Bormioli Pharma. Looking at the financials, Bormioli is expected to generate around EUR 370 million of revenues and an adjusted EBITDA margin of around 21% in 2024. In addition, Bormioli is a highly cash-generating business, with a cash conversion ratio between 60%-70%. 60%-70%. Let me give you some details about the transaction. We will be acquiring Bormioli Pharma Group from Triton, and the size of the transaction is approximately EUR 800 million. This represents an attractive adjusted EBITDA multiple of around 10x pre- synergies. Including synergies, the multiple is even more attractive.
The deal will be all cash and financed by a 2-year bridge loan. We expect that the transaction will be closed in Q4 of the current financial year. Bormioli delivers a mid-single-digit revenue growth CAGR, and is on track, achieving an adjusted EBITDA margin of around 25% in the short to mid-term. We expect, on top, incremental synergies of 3%-5% of Bormioli's revenues. A substantial portion of these synergies can already be captured near term after closing. The financial impact on us will be highly accretive. First, already in the first year after closing, we expect the deal to be adjusted EPS accretive by more than 10%. Second, our adjusted EBITDA margin is expected to increase by 50 basis points-100 basis points already near term.
Third, on the back of a 60%-70% normalized cash conversion ratio, Bormioli will be a strong cash contributor from the start. This cash flow generation will support, obviously, us to deleverage. After closing, our leverage will be temporarily elevated, but we expect that we will quickly reduce leverage to a level of 3.0x adjusted EBITDA or even below, within one year after closing. Then there is our molded glass arm. Like in plastics, molded glass will have a better product offering for our customers, and so be better positioned in the market. To assess the best option for the business, we initiated a strategic review process for this business. With that, I hand back to Dietmar.
Yeah. Thank you. Thank you, Bernd. Yeah, you heard the figures from Bernd, but actually, what we acquired for us is much more than just adding a business to our business. Actually, the strategic fit and the synergies that go far beyond the cost synergies that are relevant. So why are we buying Bormioli Pharma? Completes our portfolio in plastics. The Bormioli broad portfolio of smart closures actually complements our plastic containment solution. This gives us access to high-value solutions, not only the Bormioli solutions like dual chamber, but also the system integration capability that we can achieve with this in plastics. The system integration delivers high-value solutions access. We will be the supplier of choice for the pharma customer, today and tomorrow.
With the integrated container closure offerings, we can offer better solutions, not product, solutions for our customers, generates more value add for the customers as we are selling an integrated solution, a function instead of a product. And this generates the higher value for our customers that hopefully is also resulting in better margins. On the molded glass side, it generates a molded glass powerhouse. The Bormioli parenteral pharma exposure complements our pharma cosmetic presence, and the whole acquisitions offers an attractive financial return trajectory with single-digit organic revenue growth, margin of 25%, double-digit EBITDA growth, and highly cash generative. So the clear strong synergies beyond cost savings are helping us further extending margins into the high twenties in the glass business, the molded glass business.
Thank you, Dietmar. As mentioned by Dietmar, the transaction is highly accretive to our strategic vision, and Bormioli Pharma is highly accretive to our stated financial ambitions. The top line growth profile of our company is unchanged after the integration. We are and remain a double-digit organic sales growth company going forward. Bormioli Pharma will be Adjusted EBITDA margin accretive already near term. We expect the Adjusted EBITDA margin expansion of 50 basis points-100 basis points near term, and this feeds through to our Adjusted EPS growth, as mentioned before. Within the first year after closing, we expect the Adjusted EPS accretion from the deal to be more than 10%. Lastly, our cash generation will be strengthened and support deleveraging. Let me provide some further details on our new molded glass powerhouse, with a balanced portfolio for the global pharma and cosmetics industry.
Both businesses are complementing each other very, very well. Bormioli's parenteral pharma and Gerresheimer's pharma and cosmetic, food, and beverage exposure. The combined revenue will amount to about EUR 750 million, with an adjusted EBITDA margin of around 21% today. Supported by an expected mid-single-digit organic revenue growth, molded glass is on track to achieve an adjusted EBITDA margin, including synergies, in the mid-20s% in the midterm, significantly above the current margin level. To assess the best option for the business, we initiated a strategic review process for this business. With this, I hand back to you again, Dietmar.
Now, with this, we come to chart number seven. I think it's number seven. It's a new chart, and I really love it, as you can imagine, because this acquisition opens the opportunity to view Gerresheimer in a different way. On the upper right side, you see the containment solutions. We are forming a big base of foundation of containment solutions with our plastic solutions, with our tubular glass solutions, and Gerresheimer acts as a system integrator in what I told you a couple of times, we bring the drug to the patient. It supports a very solid foundation platform, growing high single digits with, and that's very relevant, highly attractive margin profile, already today, clearly above the midterm targets. The synergies from the acquisition and high-value solution portfolio further are further accelerating the margins and also cash flow. Next chapter is the delivery systems.
The integrated delivery systems, the area where we bring the drug to the patient, supports as our growth accelerators growing, and this segment will grow strong double digits. But also the profitability acceleration will be very strong, with profitability turbocharging as our high-value solution pipeline ramps up, supporting a very strong double-digit EBITDA CAGR. And the third column, that is what Bernd also mentioned, this molded glass powerhouse. The true molded glass powerhouse across pharma, cosmetics, food, beverage, with a very strong standalone division, with attractive growth and margin profile. And that is what we are forming. So page 8 gives you a short overview with rough figures. I, I will not read all this for you, but as mentioned before, we are buying a pharma-focused primary packaging platform.
Bormioli makes pharma plastics and pharma molded glass containment solutions, with a pretty global presence in especially Southern European footprint, based in Italy, with a very strong support also to our existing. Bernd mentioned the EUR 300 million in revenue, with roughly 21% EBITDA margin. The mid-single digit organic growth trajectory, with margins of mid-20%, let's say 25%, will support double-digit EBITDA growth and very attractive cash generation, as already mentioned by Bernd as well. Page nine is now to show how complementary the portfolio actually fits into Gerresheimer. We are buying a business that is significantly increasing the breadth of our offerings. The high complementary is visible, and it's highly complementary to what we do today. We are actually, in the old Gerresheimer, we might almost be able to say, leading in bottles and containers. Versus Bormioli, leading in smart closures and accessories.
On the other side, Gerresheimer is leading in Type III molded glass, larger pharma container and cosmetic, versus Bormioli, leading in Type I and Type II parenteral pharma markets, which is a very strong accretion. You also see this on page 10. I will not go all through these details, but what you clearly see on this chart as well, it supports a clear system integration opportunity for Gerresheimer, really accelerating our transformation to system and solution provider and clearly opening the door, and that's very relevant, to high-value products in plastics, as delivering integrated solution significantly increase, as mentioned before, the value to our customer. This classic one supplier, one solution, performance guarantee, and I mentioned it, it's selling a system, it's selling a function to our customer instead of just a product, which generates higher value for our customer.
And that helps to create a new pipeline of high-value solutions within our portfolio. Like, for example, offering our containers with their closures and droppers, or offering our EZ-fill smart vials with their rubber stoppers, or using rubber solutions for our cosmetic droppers. And the next chart is actually a chart that I call the new Gerresheimer platform. The enabler accelerator of our base Formula G strategy, means our base foundation and growth, the accelerator and growth accelerators. You might remember that I also spoke about the solid foundation that generates solid, resilient base growth of, let it be 5%-6%, and a solid margin of 23+%. This is what will now be extended and accelerated in size, and that's very relevant also. Also, in the target margins, because they will go up here in the foundation as well.
So the solid foundation platform with good growth, very attractive margin, robust cash flow, is actually supporting investments in our growth accelerators. And the growth accelerators that we try to show with the arrows on top of this chart here, are accelerating not only the revenue growth, yeah, the secular market fundamentals, like, you know, them, GLP-1, EZ-fill platforms, and so on. But they're also accelerating our EBITDA growth with acceleration of our high-value solution pipeline, that now not only be existing in some devices, syringes, and tubular glass segments, but be pretty strong in the plastic business. That will be very, very helpful. So this together, the foundation and the growth accelerators, is forming a strong company, strong margins, double-digit growth, and strong cash generation. That's the new Gerresheimer that we are in for. Next chart. That's about the molded glass powerhouse.
Bernd spoke about this. We'll be significantly increasing our portfolio in parenteral pharma. So the new molded glass segment is truly, truly a powerhouse in parenteral pharma and cosmetics. We are generating a division with greater scale and size, let me say, EUR 750 million in revenues to start with, and with single-digit growth. We have attractive margin opportunities, starting is 21% today, and we are on very good track to mid-20%s, including synergies in near term or in the mid-term. The strong European footprint, with global growth opportunities with our international sites in the Gerresheimer. And we have a solid mix of 50%, roughly 50% in each pharma and cosmetic food beverage. What is important, and you all know this following Gerresheimer, we have invested significantly to develop and accelerate the margin in our own business.
Combined with Bormioli's footprint, this Bormioli business is now, what we say, at an inflection point. It's the right moment in time to assess the best value creation outcome for this business that might be within or also outside of the Gerresheimer story.
Thank you, Dietmar. We secured a committed 2-year bridge from LBBW, UniCredit, and Commerzbank with attractive conditions to fund this acquisition. After the first 12 months, after the transaction, the maximum covenant threshold can be increased to up to 4.25 x Adjusted EBITDA. This gives us sufficient leverage headroom, and the strong margins, cash flow generation, and synergies enable us to deleverage. After closing, our leverage will be temporarily elevated to a level of mid- to high-level 3.x times, but we will quickly reduce leverage to a level of 3.0x Adjusted EBITDA, or even below, within 1 year after closing. To wrap up, the deal is well structured regarding its financing and still leaves sufficient flexibility to execute ongoing growth projects. With that, back to you, Dietmar.
Yeah, for the presentation, I can only sum up now with chart number 14. It's actually surprise, surprise, the chart you already saw at the beginning. So the acquisition of Bormioli Pharma is strengthening our system integration and accelerating our transformation. Yeah. It's highly strategic for us, complementary with our existing portfolio and footprint, has a profitable growth track record, attractive margins and cash generation, and this, of course, accretive to our margins and earnings per share trajectory.... We see substantial synergies that will accelerate the value creation for our shareholders. And with this acquisition, we will initiate strategic review to explore options for our new molded glass products. And the last point, delivering on our vision, strengthening the breadth of our platform, accelerating our transformation journey. And with this, we are at the end of our short presentation.
I understand that we are happy to take your questions. Thank you so much.
Operator?
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. If you are using a speaker equipment today, please lift the handset before making your selection. Anyone with a question may press star followed by one at this time. Our first question comes from James Vane-Tempest from Jefferies. Please go ahead.
Yes. Hi, thanks for taking my questions, please. Just my first one is, there's a comment on midterm guidance. I was just wondering, there wasn't anything in the release, or at least today, in terms of reiterating your 2024 guidance. Definitely, that's sort of been, you know, some concern. Just given what we've seen with some of the peers, just wondering whether you can reiterate your 2024 guidance today. Second question is, in terms of your midterm, high-value solutions target, you know, sort of putting this asset in, you know, how does that change the 35% target over the midterm? And then my third question is, given the cash generation of the molded glass, you know, how will this impact your ability to finance growth in the other segments, if you are sort of looking at a strategic review and what that might mean? Thank you.
Did you get the second one?
High-value solution target. Ah, okay. Yeah. James, thank you for the questions. As we just signed early, early this morning, of course, we do not have as to all this. So the midterm guidance is, we will only be able to adjust after the closing, of course, as you can imagine. And today, we thought for the old Gerresheimer, I don't see any reason to adjust the midterm guidance. I know that there are rumors in the market that some of our peers might do this, but we are not doing this. And, yes, the acquisition will positively impact the midterm development of the company, but for the guidance, it's probably a bit too early. And, high-value products, I think, is clearly a very relevant point.
We have, as I indicated in the presentation today, high-value products, primarily in the areas syringes, tubular glass, and in some of the devices. We are now, especially with the synergies in the system integration, we will form a pretty strong field of high-value products in plastic. The plastic business will become, with the synergies, very, very attractive, but it's also here to give out a percentage a bit too early. But this will definitely be very attractive and very, very helpful.
Regarding the cash, regarding the cash generation, James, this has not, no impact, actually, this project, regarding our growth plants. This is true for our container solution area, for our, obviously, also delivery solution area, and also for molded glass. So no, restriction on this one. And again, given the strong cash contribution what we have there, we expect end of basically 12 months after closing, we should be a level of 3.0x, leverage, and that's our aim.
Thank you. Just to clarify, I understand the midterm guidance question, but I was relating specifically to 2024. I just, you know, the asset, if you, you know, it's gonna close in kind of Q4, but at least kind of looking at the business on an underlying basis, are you reiterating your 2024 guidance today?
No, we are not changing the 2024 guidance. No, as regarding this 2024 guidance, there's no change. There's no change. We are crystal clear regarding our goals from 5%-10%, and this is still valid.
Thanks very much.
The next question comes from Oliver Reinberg from Berenberg. Please, go ahead.
Well, thanks very much for taking my questions. Three of me. The first on the kind of strategic review that you already announced today. So just wonder if you can provide a bit of more of what direction you're thinking. And in particular, is it fair to assume that you're aiming to first capture a larger part of the synergies in the first two years, so any kind of exits come only later, or would you also not exclude that this could come earlier than that? Second question, please, is just like, can you talk about a bit of what kind of risk you see here? Obviously, you're doing quite some significant capital deployment in an area where you do not want to be involved long term, potentially. So any kind of current molded glass, obviously, very energy-intensive, what kind of hedging is in place here?
Can you also disclose what kind of vial share do you have in Bormioli? Because obviously there have been talks about potential overcapacities in the market. And then the third question, please, just on funding. I mean, in the absence of any kind of strategic exit here, obviously, we still get below three times or towards three times, which is quite encouraging. But how do you think about the general flex, strategic flexibility and leverage? I think last time, you decided for a kind of rights issue, just to reinstate even more flexibility. So any kind of reason we should bear in mind what may be different this time? Thank you.
Yeah, I take the first two questions, yeah. First thing, to the molded glass. Should not be underestimated. First of all, I repeat the text I did for the chart number 12. We are building a true powerhouse for molded glass, which is pretty unique in the market, yeah. Strong sales from the very beginning, strong mid-term growth, with reasonable growth, actually. Margin with strong CAGR and very positive development into the mid-2020s. Strong European footprint and a solid mix. Important is to understand that Gerresheimer site has invested significantly to develop and accelerate the margins in this business. And together with the Bormioli's footprint, this is now forming a company where you can boom! It is at an inflection point, and it might be the right moment to assess the best value creation.
I have not said that we 100% guaranteed are selling it. We would put it - we will put this business on a strategic review. And yes, it's right, there's also an opportunity to get this outside of Gerresheimer. I would not believe that this is not business we do not like. And it forms also the second question. The businesses here are strongly complementary. There's, in principle, zero overlap, as the position of the Bormioli's in molded glass is very strong in the parenteral Type I and Type II glass, where we, especially in Europe, are, in principle, very weak to the point of not existing. And this complementary, of course, is, is very helpful, and generates a very strong company with very interesting synergies. The overcapacities that you are referring to are, in principle, for this specific area of the business, not relevant.
In plastic, we are looking for growth opportunities and are eager to find space to actually set up the additional growth. And also, as I said, in molded here, it's very complementary. There is no capacity that we actually are generating. Yeah.
Oliver, then I take on the question regarding the synergies one, when this is materialized, we expect that 65%-70% of the synergies will be captured in just 2 years after closing, roughly. Regarding your question, the capital deployment, I mean, Bormioli Pharma has very strong cash and contributing, and this is also influenced by the fact that we don't see major furnace repairs at the same time. Last but not least, question was regarding the equity topic and the debt structure. I mean, as mentioned before, we have really sufficient headroom. We have a covenant out there of 4.25x leverage, and we will be end of Q4, mid- to high 3s leverage. Given the strong cash contribution of the business, end of 2025, we should be around 3.0x or even better.
There are no equity rates needed, and we need to see how the strategic review of molded glass new will ultimately impact our thinking in this regard. So we have really flexibility.
Perfect. Thanks so much.
The next question comes from Anna [Belle] from Barclays. Please go ahead.
Oh, thank you, sir. I was on mute. Congratulations on the deal, guys. Very exciting. A couple of questions from me. Just on the synergies, I was wondering, obviously, the revenue synergies are pretty clear, I think, given the one-stop-shop model. But could you give any more granularity on synergies down the P&L? In particular, you know, your SG&A potential sales has always stood out to us as being slightly higher than other pharma packaging companies. So just wondering if there any synergies there that you could particularly call out, that would be great. And then just on the leverage, and the cost of debt, is it fair to assume the cost of debt on this new funding that's in line with what you've had recently?
Or any guidance there would be great. And then, I guess, thirdly, the strategic review of molded glass, do you have a timeline for sort of when you'd expect that to wrap up? Thank you very much.
It was a bit hard to understand you, actually. I guess I got out of the first question that you asked, whether the synergies that are relatively high, that are higher than with other companies. I cannot judge, that they are higher than with other companies, but you have to see that the synergies are far beyond pure cost synergies. It's more than this, and that, of course, is very helpful. Business is complementary in a certain way, and the synergies with generating system solution is very helpful, yeah. Regarding your question, Anna, it was difficult to understand your question regarding leverage, I have to say. Can you repeat this again?
Yes, sir. Apologies. That was my phone line. Yeah, just, just on sort of this, this EUR 800 million of funding, just wondering what we can assume in terms of cost of debt. Is it in line with the-
Ah! Okay. Very attractive conditions, in the average for the first year of the bridge. Actually, you pay based on EURIBOR, and plus, let's say, in the average, 100 basis points. That's actually what we need to pay, so very effective conditions on this side. Yeah.
Great. Thank you. And, yeah, so my third question on the synergies, I was just wondering if you have, if you have any sort of more granularity you can give us on the synergies? B ut in particular, you know, is there anything on SG&A that you think you can optimize, or anything that you call out?
No, thanks, thanks, Anna, but also it was acoustically difficult, but just to start with the-, w e basically see synergies in different lines indeed. And we have state synergies, obviously, a significant portion. Part is also the cost synergies, raw material, regarding the, obviously, the, the purchase, area productivity. These are the areas where we see the major chunk of the sources. And productivity in the plants, what I just mentioned, these are the key sources of the quantifiable as before. I mean, in the end, the whole thing is one plus one is not two, but three. And there are a lot of business opportunities out there with which could also come on top.
The next question comes from Jonas Jansen from Frankfurter Allgemeine Zeitung. Please go ahead.
Hello, good morning. I have just two questions. Can you maybe tell us a little thing about the one-time integration costs of this deal and what you expect there? And on the other hand, you spoke about synergies, of course, but is there something that maybe the two companies do exactly the same at the moment? So, do you plan to keep everyone on board? Are there some parts you need to have a look at where you maybe can put some production together or something like that? Thank you.
Yeah. Thank you, Jonas. As indicated before, the businesses are really highly complementary. The overlap is actually pretty limited, and that's why we will try to keep people on board and the facilities on board. That's the point. Of course, there will be cross-usage, yeah, because we, as said, with the strong growth of the company, we are, of course, also looking for opportunities and areas where we can grow into, and that, of course, is very much appreciation. And the one-time integration costs, Bernd. It's around EUR 10 million in this ballpark, what you need to calculate the integration costs. Yeah.
Thank you.
The next question comes from Falko Friedrichs from Deutsche Bank. Please go ahead.
Thank you. Good morning. My first question is, can you tell us to what extent the Bormioli assets can be used for GLP-1 contracts going forward? And then secondly, sorry, briefly back to your 2020 guidance. Do you feel like the full range, the 5%-10%, is still possible this year? Or should we assume that the lower end is likely more realistic? Thank you.
Yeah. To the first question, the GLP-1 exposure of the Bormioli's is relatively small, because it's primarily in plastic and in molded glass. And the plastic, most of the plastic business in GLP-1 is on the old Gerresheimer side already. And the second question was probably not to the acquisition. It was in general to the guidance, and I think Bernd already confirmed this. We are confirming the guidance. There's no reason why we would not change it right now.
Okay. Thank you.
The next question comes from David Adlington from J.P. Morgan. Please go ahead.
Morning, guys. So just on the temp EPS accretion, I assume you're assuming within that number that you don't dispose of the molded glass business. I was wondering if you could give us some thoughts in terms of how that might change if when you do dispose of the molded glass. Secondly, just in terms of the margin targets, the mid-20%s, I assume that assumes that you extract the synergies, that 20% mid-20%s, including synergy, with the synergies on top of that. And then maybe just more recently on Bormioli's trading, I just wonder if you could give us an idea of what they've been growing at over the last 2 years-3 years, the top line, and also whether they have seen any destocking and what due diligence you've done to make sure that you're not going to see destocking in the coming months? Thanks.
Maybe just to take on, David, thanks for the question. Just take on your first question regarding the EPS. It's definitely set up in the way that we include Bormioli, based on, actually, as Bormioli Pharma, assume that the existing portfolio is still around. So we don't have a backup calculation now saying what would be if the generic revenue would lead to a divestiture. But really, portfolio, what we have today, plus Bormioli Pharma, that's the way how we calculated it actually. And it will be again above 10% in the first year after... Regarding the margin question, it was acoustically also difficult to understand. It was referring to the 25% synergies. In this regard, in the case of molded glass, new, it's existing synergies. In the case where you talk about Bormioli Pharma, as Bormioli Pharma, it's, that's on top, the synergies. 25, plus the synergies of 3%-5%.
The last business, or the business that it has been growing mid-single digit. But of course, we have quite some growth planned in the old Gerresheimer, so that the business, that the powerhouse that we are building actually will generate attractive growth, and as I said, also attractive margin profiles.
Perfect. And then, have they seen any destocking?
That's not the key areas that are affected by the destocking, honestly spoken, so that's not what they see. It's, and it's similar to the Gerresheimer world as well. That's not the product segments where we see the distortion.
Understood. Checking. Thank you.
The next question comes from Dylan Van Haaften from Stifel. Please go ahead.
Hi, guys. Good morning. Congrats on the deal. So just three from my side. So just firstly, on the leverage guide. So if we look at the ambition to deleverage one turn, so that means, like, a pretty material acceleration in terms of free cash flow generation. Could you kind of split where you get your confidence from on this? Secondly, just could you tell us roughly what the HVS split is for Bormioli, as per your definition of HVS? And then maybe the final question, just on, I think Bormioli has 75% of sales with the top 20 customers. Given there's been a bit of concentration risk in sort of the pharma packaging market, do you have you diligenced if there's any sort of, you know, effects or anything like that, or if any of the customers' activities are changing? Thank you.
Just regarding your first question, with respect to leverage, I mean, if you consider that you will be at the end of this year, so basically assuming closure in Q4, at a level of 3.6 and 3.7, and then if you take the calculation out, what we actually laid out for the cash contribution for Bormioli Pharma, then you actually really can come to your own conclusion that without equity raise, you will end in a level of 3.0, or even better. So it's really as simple as actually in the end, but a very good question again, Dylan. Yeah, the next one, the high-value product question is a very good one, because in Bormioli world, they have no definition of high-value products.
They have, of course, really interesting solutions, especially in the plastic area, also dual-chamber containers and so on, which is something that, which is all with own IP, which is very effective for us. But the generation of high-value products will be generated by the merge of these two technologies. It's really, and it also wasn't the answer of the second question, so how much overlap do we have? It's really different because you have, and if you take the plastic world, the Bormiolis are very strong in closures and also accessories, and we are very good in the bottles. This, together, will generate bottle and closure solutions that, in the end, will generate high-value solutions.
The margins are attractive already, but with the synergies, we will generate strong business that is, of course, filled with high-value solutions, and that not only in five years from now, but in more or less almost immediately. Similar as with the glass side, there is almost no overlap, because they are very strong in the type one, type two pharma glass in Europe, where the old Gerresheimer is hardly present. That generates, in principle, the whole story, what I said, very complementary. And as such, it's not only on the products, but interestingly, why it's also on the customer base, very little overlap, and that makes the whole story so attractive.
Understood. Thank you.
The next question comes from Klaus Brune from PLATOW Verlag. Please go ahead.
Good morning. Thanks for taking my question. First of all , congratulations to a very strategic fitting acquisition that also seems to come at a very attractive price. Can you give us some color as to the timeline that you are taking for your strategic review of the molded glass business? How long do you give yourself for review, and what you will do with that sizable portion of your company? And the second, given that your leverage is now a bit above what, you know, you've seen as a long-term target, is that limiting your future M&A possibilities for the time being? And if so, are there any areas where you would have liked to do further M&A? Thank you.
Well, maybe just to start with the second question, and whether we are limiting our future possibilities, the answer is no, actually. Although, when we look at it, when we look at it, all our growth plans, we are basically able to fund, obviously, and in this trajectory, what we just said regarding our leverage targets. So, not an issue on this end. Regarding the timeline for the strategic review, yeah, you saw that we have a bridge financing of two years. I would like to have not only the result of the review done by this, but ideally also, if we would come to a certain conclusion, also the result within this time frame, and that will help.
Very short term, of course, in the next month, we will probably not do another acquisition. But it opens a tremendous interesting window for the future, in the firepower that we might generate company. And that is very interesting as another step in the transformation.
Thank you.
The next question comes from Olivier Calvet from UBS. Please go ahead.
Yes, hi, good morning. Thanks for taking my question. I have three left. So the first one is on the molded glass assets. How confident are you in the quality of these assets? And also, is there any significant difference in this business in terms of the natural gas hedging strategy that Bormioli had versus your own? Secondly, just sorry to come back on 2024 guide. I know it's not the subject of the call, but obviously, given what's been going on, could you please remind us how you expect the vial market to recover sequentially over second to fourth quarter? And thirdly, just in terms of understanding the strategic review's impact post-closing, is it correct to understand you're gonna probably redraw your segments? Thanks.
Yeah. First, to the molded glass, it's very complementary, and the Bormiolis are actually very strong in this type one, type two, really pharma glass. A weakness that we had in Europe and couldn't enter into this fields, and that is very complementary. How do we see this business run? There's no doubt. This is a world where you follow your competitors, so we are following this player since many years, and have a certain advantage in being able to judge the business. So we know the customers, we know their markets very well, and that's why we have quite some confidence into this business. They're actually pretty strong. It's a company that is significantly better than the Gerresheimers, even if I don't want to admit this, in the pharma parenteral glass, it's fact.
The 2024 guidance is something Bernd is here to answer, but the vial market recovery, here we see similar effects like our peers, because that's what you would like to hear, even though the way we are affected might not be as strong as the others. So we are confident that we can deliver to our guidance, as we have other areas in our portfolio that are actually doing very well and supporting us strongly. And what is the strategic review impact? What was this? You haven't changed.
Oh, yeah, no, thanks for the question regarding just to highlight two aspects to molded glass Bormioli. The one is also where we looked at is we don't have any major furnace repairs in the coming upcoming years. And regarding energy, you ask see here, definitely upside for us in this in the year. And one question was related to the new segmentation. Definitely, the acquisition opens up possibilities for a new segmentation, and we will review this after closing in the new fiscal year. So no change now in this current fiscal year.
What you can expect, obviously, we need to have the closing, and then we need to have the new year, and then we approach, then we shape it new and have a new segmentation. That's our idea.
Okay, thanks, and sorry, I missed one of my questions. First, on, on the drivers of Bormioli's EBITDA margin growth, which you see, you know, reach 25% midterm, can you talk about what those are? Are we talking capacity utilization, or are you already integrating some of the synergies in that business, that you expect, you know, post, post-closing?
Actually, the mid-twenties margin midterm goal is not for the Bormioli business at all. It's for the total molded glass powerhouse. And there is various aspects. It's synergies, it's of course, also a certain way, the hedge. There was a question on this hedge. The hedge of the Gerresheimer was probably more helpful, and you can take over.
Ah.
No, no.
Basically, if you- See, are very flexible. So we have here, indeed, yeah, we have the higher productivity. What we should not forget, and, Dietmar elaborated on this, mixed in the niche markets. I mean, don't forget the high-value cosmetic in this area. This is very attractive for us. We see definitely higher productivities, productivity gains, and last but not least, also the synergies are 1%-100%, something. This is our plan. Purchasing power. There are various aspects that are available.
Right. Thanks. But, but specifically on Bormioli Pharma, on slide four, you talk about the business being on track to achieve adjusted EBITDA margins of 25%.
Ah, this was your-
Just wondering about it. Yeah.
Regarding plastic, Dietmar elaborated on the synergies here, but indeed, if the plastic grows, we assume it comes with a very high drop-through rate, we should not forget. Those are basically the key pillars for the margin expansion in this area.
Okay, very helpful. Thanks.
Operator, next question. The next question comes from [audio distortion] from BNP Paribas. Please go ahead.
Good morning. Congrats on the deal, guys, and thanks for taking my questions. I just have two. First one is, can you please discuss a little bit of the overlap that Bormioli Pharma has on your customer base already? And maybe would you call out any interesting new relationships that would be worth mentioning? And then secondly, given you're bringing in nine new plants with the acquisition, does this kind of impact your expected need for CapEx investments going forward? Thank you.
I take the first one, you take the second. The overlap, that's an easy answer, because there is actually, of course, you know all these customers, but, but with these specific products, it's in principle, no overlap, very limited overlap. It's really complementary. Regarding your question, if I understand this correctly, the new plans that influence on our future CapEx, ultimately, we really budgeted for this kind of new plans and also appropriately planned also for the CapEx, and we want to run the operation appropriate way, so really very clear.
Super. Thanks. If I could just go back to that first question. Given you guys have a limited, sort of, sort of overlap, do you see some potential to maybe cross-sell the new customers that are coming in to Gerresheimer? Thank you.
The question is good. The answer is nothing that flows out of my hands easy. That's something we have to look into in detail, how far we can use this Type I exposure globally. But we should not forget, in Type I glass, we have certain exposure in Asia and in the US. It's just the European footprint that in the old Gerresheimer is not existing. But we will look into this. We see quite some opportunities to drive this.
Got it. Thank you.
The next question comes from Veronika Dubajova from Citi. Please, go ahead.
Hi, guys. Good morning, and thank you for taking my questions. I just have one big picture one, if I can, please. Obviously, you are now going to be the only glass container manufacturer with both stoppers and vials and syringes under one roof. Just curious how you think about the competitive advantage that this bestows upon you. And maybe if you can just relate it to that, talk to the size of the stopper business at Bormioli and how competitive that is relative to the other two big players in the market. That would be helpful. Thank you.
Broad question. The answer is the following: I mean, Gerresheimer had a very broad already in the past, and this is clearly an advantage, especially if you go in the direction of system integrator, and we see this. The acquisition here will further accelerating, really accelerate the ability how we can do system integration. And that is the big point, because the customers, they don't celebrate that you have a broad portfolio. Because a broad portfolio, they can also get from various suppliers. The value for the customer is only generated if you make your portfolio and you integrate your different products to a system, and that's the value that we actually are generating. We had this before in various areas, you are totally right, with devices and synergies, and syringes, excuse me.
But we are now forming a stronger platform, especially for plastic, with the Bormioli closures and our bottles, and also for the molded glass. Hope that answers your question.
Thanks, guys. Thanks.
The next question comes from Dario Fasani, from Intesa Sanpaolo. Please, go ahead.
Hi. Thanks for taking my question. Could you please tell us what do you plan to do with Bormioli Pharma's bond? I'm asking because the bond includes a change of control provision and put option, but it is already callable at par since mid-May. Thanks.
Yeah, Danilo, thanks for this, thanks for this question. Actually, we will look at it and, and first of all, we need to close it. It's very difficult for us. We are not yet as a owner. And when we are the owner, then we will basically look at the legal obligations and fulfill them, no doubt, yeah, crystal clear. Other than that, I cannot answer, I cannot answer today, yeah. I hope you understand, Danilo.
Yeah, okay. Thank you.
We have a follow-up question from James Vane-Tempest from Jefferies. Please, go ahead.
Hi, thanks for taking my follow-up question. Just regarding the different segmentation, as a follow-up, you obviously talk about having three leading platforms, and just wondering if you could clarify at least how you're potentially thinking about disclosure at this stage, whether that's revenues and at the EBITDA level. And I guess looking at the pie chart which you've given, just kind of curious to include the advanced technologies business in the delivery systems business, just given obviously it is at a very, very different kind of profile just in terms of profitability and risk. And if we were to kind of adjust for the margins, which you kind of have alluded, that the total molded business would be looking at, and we sort of take out the advanced technologies, we get to roughly around 25% EBITDA margins.
I was just kind of curious, you know, if we were to look at the core delivery systems and containment, you know, how we should think about the relative profitability of those as well. Thank you.
Yeah, let me answer it. I try to answer in the following way. The containment. Let's assume we go into the segmentation, because so far we only say it offers the opportunity. In containment, that you would generate a business that has strong margins, yeah. I have to say at the moment, above where we are in the midterm guidance already, strong margins. There's a business that has... That's why I like it. It's a strong foundation with strong margin. Also, the first year, strong growth, not obviously, but high single growth and a very attractive CapEx ratio, huh? You have to say, CapEx ratio, which is attractive, so it generates a very solid foundation. The next area of delivery systems, here you have today a margin that is maybe in the early 20s.
But the strongest CAGR that you will see in the company is definitely on this, which is, that's what we said, strong double-digit CAGR on the EBITDA margin, and this is what you will see. So you have strong double-digit growth on the top line, you have strong double-digit CAGR on the bottom line. And this is what is forming the story of the delivery solutions. And I think I spoke about, we spoke about the new molded glass powerhouse, mid-20s, and we, that would be very good, mid-20s margins, yeah, in the mid-term, and also mid-single-digit growth, and that is also very attractive. So what we are building here, as even the third segment, is an attractive business on its own, and that is what you will see.
So the story comes always back. We're building a very strong foundation that is very resilient, delivers the profitable story, and on top we have, and they might change over time, key drivers of the acceleration in both top line, but also in the bottom line. And that as a whole is forming a company that is now growing double-digit and achieves margins that are so far regarded mid-term mid-twenties, but that might also be positively influenced as soon as we have the details and the close.
Thanks, [Rainer].
So you hear this from my side. I like the story. It's strong. And Bernd, of course, is eager to say that the cash generation is strong. That's also something that is very relevant. Thank you.
Thank you very much. With this, we will close today's call. We are, you know, available for any follow-up calls, should you still have questions, and we are looking forward to seeing many of you soon. Thank you very much, and-
Thank you so much, and thank you for your interest in the strong Gerresheimer. Thank you. Have a nice day. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.