1006-00006 · Client 1006 · Diligence/Regulatory

hsr-act-analysis-memorandum.docx DOCUMENT M&A / Corporate

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 1185 Avenue of the Americas, 32nd Floor New York, New York 10036 Telephone: (212) 554-7800 Facsimile: (212) 554-7801

May 15, 2025

MEMORANDUM

TO: Harrison Wexford, Partner, Calderwood & Harkness LLP Sandra K. Liu, General Counsel, Crestline Packaging Solutions LLC

FROM: Megan Chu, Associate, Calderwood & Harkness LLP

RE: Hart-Scott-Rodino Antitrust Improvements Act — Filing Threshold Analysis for Crestline Packaging Solutions LLC's Proposed Acquisition of Substantially All Assets of Allegheny Valley Packaging, Inc.

MATTER NO.: 1006-00006

REVIEWED BY: Harrison Wexford, Partner

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I. Executive Summary

This memorandum analyzes whether the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline," "CPS," or the "Buyer"), an Ohio limited liability company and portfolio company of Ridgeway Capital Partners Fund III, LP ("Ridgeway Fund III" or the "Fund"), of substantially all of the assets of Allegheny Valley Packaging, Inc. ("AVP" or the "Seller"), a Pennsylvania corporation, requires a pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (the "HSR Act"), and the rules promulgated thereunder by the Federal Trade Commission (the "FTC"), codified at 16 C.F.R. Parts 801–803 (the "HSR Rules").

The proposed transaction is structured as an asset acquisition, to be consummated pursuant to an Asset Purchase Agreement (the "APA") with an anticipated execution date of June 15, 2025, with an aggregate purchase price of One Hundred Eighty Million Dollars ($180,000,000), subject to customary post-closing adjustments for net working capital, indebtedness, transaction expenses, and cash. The transaction is expected to close on or about July 31, 2025, with an outside date of September 30, 2025.

Conclusion. Based on the analysis set forth in detail below, it is our conclusion that no HSR Act filing is required for this transaction. Although the nominal aggregate purchase price of $180,000,000 facially exceeds the applicable minimum size-of-transaction threshold of $119.5 million (as adjusted by the FTC for 2025), the HSR Act and the FTC's implementing rules require that the size-of-transaction be measured by reference to the value of the assets actually being acquired, rather than by reference to the aggregate consideration stated in the APA. After conducting the required asset carve-out analysis to exclude non-reportable and excluded assets from the HSR size-of-transaction calculation — including, most significantly, cash and cash equivalents of AVP, tax refunds and credits attributable to pre-closing periods, insurance policies, corporate records, and the corporate name of the Seller (which is not being permanently transferred) — the adjusted acquisition value for HSR purposes falls below the threshold at which a mandatory filing would be triggered under the applicable size-of-transaction and size-of-person framework. This conclusion has been verified against the FTC's 2025 adjusted thresholds, which became effective in February 2025.

This memorandum was prepared by Megan Chu, Associate, and reviewed by Harrison Wexford, Partner, Calderwood & Harkness LLP. We recommend that no pre-merger notification filing be made, and that the deal team continue to monitor for any changes to the transaction structure or applicable thresholds that could alter this conclusion prior to the anticipated closing date.

II. Transaction Overview

A. Parties to the Transaction

1. The Buyer: Crestline Packaging Solutions LLC

Crestline Packaging Solutions LLC is an Ohio limited liability company, headquartered at 4100 Commerce Parkway, Suite 800, Akron, Ohio 44308. CPS's Employer Identification Number is 84-3291047, and its Ohio Secretary of State Filing Number is 4287653. CPS is a mid-market manufacturer of corrugated packaging, industrial containers, and specialty chemical-resistant packaging materials. The company currently operates six manufacturing plants located across Ohio, Indiana, and Kentucky, employing approximately 1,400 individuals across its operations. For the trailing twelve-month ("TTM") period ended March 31, 2025, CPS reported consolidated revenue of approximately $620,000,000.

CPS is a portfolio company of Ridgeway Capital Partners Fund III, LP, a Delaware limited partnership. The general partner of Ridgeway Fund III is Ridgeway Capital GP III LLC, a Delaware limited liability company. Ridgeway Capital Partners maintains its principal office at 277 Park Avenue, 38th Floor, New York, New York 10172. The Employer Identification Number for Ridgeway Capital Partners Fund III, LP is 83-2107594. Ridgeway Fund III held its final close in 2020 with total committed capital of approximately $2.8 billion. CPS was acquired by Ridgeway Fund III as a platform investment in November 2021, and the proposed acquisition of AVP's assets represents a bolt-on acquisition within Ridgeway's broader strategy of consolidating and scaling mid-market packaging businesses.

2. The Seller: Allegheny Valley Packaging, Inc.

Allegheny Valley Packaging, Inc. is a Pennsylvania corporation (organized and existing under the laws of the Commonwealth of Pennsylvania), headquartered at 250 Industrial Boulevard, Butler, Pennsylvania 16001. AVP's Pennsylvania Department of State Entity ID is 6519847, and its Employer Identification Number is 25-1784632. AVP has elected S-corporation status for federal income tax purposes.

AVP is a family-owned manufacturer of corrugated packaging, folding cartons, and specialty coatings designed for food-grade and chemical-grade packaging applications. The company operates two manufacturing facilities: a primary facility located at its headquarters in Butler, Pennsylvania, and a secondary facility located in Meadville, Pennsylvania. AVP employs approximately 340 individuals across both locations. For the trailing twelve-month period ended March 31, 2025, AVP reported revenue of approximately $95,000,000 and adjusted EBITDA of approximately $18,500,000, as calculated in accordance with the methodologies employed by Hargrove Thornton LLP, the buy-side financial diligence advisor on this transaction.

The equity of AVP is held by three individual shareholders, all members of the Horvath family:

• Gerald W. Horvath — 72% of issued and outstanding shares; President and Chairman of the Board

• Patricia A. Horvath — 18% of issued and outstanding shares; Secretary

• Michael G. Horvath — 10% of issued and outstanding shares; no officer or director position

Gerald W. Horvath has served as President and Chairman of the Board of AVP since 1991, when he succeeded his father, the company's founder, in those roles. As the holder of 72% of AVP's outstanding shares and as its President and Chairman, Mr. Horvath exercises control over AVP for purposes of the HSR Act's "ultimate parent entity" analysis, as discussed further in Section III.D below.

B. Transaction Structure

The proposed transaction is structured as an acquisition of substantially all of the assets used in or relating to the business operations of AVP, to be governed by an Asset Purchase Agreement with an anticipated execution date of June 15, 2025 (the "APA"). The APA will be governed by the laws of the State of New York, without regard to conflicts of law principles.

Aggregate Purchase Price. The aggregate purchase price for the Acquired Assets is $180,000,000, payable in cash at closing, subject to customary post-closing adjustments. Specifically, the purchase price is subject to adjustment based on: (i) a net working capital adjustment, with a target net working capital of $12,400,000 (as defined in the APA); (ii) an adjustment for any indebtedness of the Seller outstanding as of the closing; (iii) an adjustment for unpaid transaction expenses of the Seller; and (iv) an adjustment for any cash or cash equivalents on hand at closing (which are Excluded Assets and will not be acquired by CPS). The net working capital adjustment is expected to be calculated in accordance with GAAP, applied consistently with AVP's historical accounting practices, and any dispute regarding the final net working capital determination will be resolved by an independent accounting firm mutually agreed upon by the parties.

Acquired Assets. The Acquired Assets include substantially all of the assets owned by AVP and used in or related to its business, including, without limitation, the following:

(a) Real Property. The Butler, Pennsylvania manufacturing facility, consisting of approximately 285,000 square feet of manufacturing and office space situated on approximately 22.5 acres of land, together with all improvements, fixtures, and appurtenances thereto; and the Meadville, Pennsylvania manufacturing facility, consisting of approximately 110,000 square feet of manufacturing space situated on approximately 8.2 acres of land, together with all improvements, fixtures, and appurtenances thereto;

(b) Tangible Personal Property. All machinery, equipment, tooling, vehicles, furniture, fixtures, and other tangible personal property owned by AVP and located at or used in connection with the Butler and Meadville facilities, including but not limited to corrugating lines, die-cutting equipment, flexographic printing presses, coating and laminating lines, forklifts, and material handling equipment;

(c) Inventory. All raw materials (including containerboard, linerboard, medium, inks, coatings, and adhesives), work-in-process, finished goods, packaging materials, and supplies;

(d) intellectual Property. All patents, trademarks (other than the corporate name, as noted below), service marks, trade names, domain names, trade secrets, know-how, proprietary formulations (including AVP's proprietary food-grade and chemical-grade coating technologies), customer lists, technical data, and other intellectual property rights owned by AVP;

(e) Contracts. Approximately 47 material contracts to be assumed by CPS, including customer contracts, vendor contracts (including, notably, the containerboard supply agreement with Consolidated Linerboard Corp.), equipment leases, service agreements, and the collective bargaining agreement with the International Paperworkers Union Local 814 (the "CBA"), which covers approximately 185 production employees at the Butler facility;

(f) Permits and Licenses. To the extent transferable, all governmental permits, licenses, approvals, and authorizations held by AVP and necessary for the operation of the business at the Butler and Meadville facilities;

(g) Books and Records. All books, records, files, and documents relating to the Acquired Assets and the business (other than the Excluded Assets and Excluded Liabilities, as described below); and

(h) Goodwill. All goodwill associated with the business and the Acquired Assets.

Of the approximately 47 material contracts to be assumed by CPS, approximately 12 require the consent of a third party to assignment. The deal team is currently working through the consent process and, based on preliminary outreach, does not anticipate material difficulty in obtaining the requisite consents.

Excluded Assets. The following assets of AVP are specifically excluded from the transaction and will be retained by the Seller:

(a) All cash and cash equivalents of AVP;

(b) All tax refunds and credits attributable to pre-closing periods;

(d) All insurance policies of the Seller, including general liability, product liability, property, and directors' and officers' insurance policies;

(e) The corporate name "Allegheny Valley Packaging, Inc." — this name is not being permanently transferred to CPS; rather, the APA provides for a limited, non-exclusive, royalty-free license for CPS to use the name for transitional purposes only for a period of six (6) months following the closing date, solely to the extent necessary to wind down AVP-branded materials and to communicate the change in ownership to customers and vendors.

Excluded Liabilities. The following liabilities of AVP will be retained by the Seller and will not be assumed by CPS:

(a) All pre-closing indebtedness of AVP, including approximately $14,200,000 outstanding under AVP's revolving credit facility with Merchants & Traders Bank (which will be repaid in full at or prior to closing from the sale proceeds);

(b) All pre-closing tax liabilities, including any income tax, employment tax, or other tax liabilities attributable to periods prior to the closing date;

(d) All underfunded pension obligations of AVP, estimated at approximately $3,100,000, relating to AVP's defined benefit pension plan covering certain hourly employees; and

(e) All transaction expenses of the Seller, including fees and expenses payable to Seller's legal counsel, financial advisors, and other professional service providers in connection with the transaction.

Letter of Intent and Exclusivity. A non-binding Letter of Intent was executed by the parties on April 10, 2025. The LOI includes an exclusivity provision pursuant to which AVP agreed not to solicit, encourage, or engage in discussions with any other potential acquirer through June 9, 2025.

C. Financing

The acquisition will be financed through a combination of debt and equity:

(a) Incremental Term Loan. CPS will obtain a $130,000,000 incremental term loan under its existing Credit Agreement dated as of November 15, 2021 (the "Existing Credit Agreement"), with Pinnacle National Bank, N.A. serving as Administrative Agent and a syndicate of lenders. The incremental term loan has been committed pursuant to a commitment letter dated April 22, 2025 (Reference No. PCL-2025-04-1187). The commitment from Pinnacle National Bank expires on August 20, 2025, and is subject to customary conditions, including execution and delivery of the APA, delivery of satisfactory due diligence materials, accuracy of representations, and no material adverse effect.

(b) Equity Contribution. Ridgeway Capital Partners Fund III, LP will contribute $50,000,000 of equity capital to CPS in connection with the acquisition, pursuant to an equity commitment letter dated April 22, 2025. The equity commitment is subject to customary conditions, including consummation of the debt financing and execution and delivery of the definitive APA.

Estimated Closing Date. The parties currently anticipate closing the transaction on or about July 31, 2025. The APA will contain an outside termination date (the "Outside Date") of September 30, 2025, after which either party may terminate the APA if the closing has not occurred (subject to customary limitations for a party whose breach has caused the failure to close).

III. HSR Act — Applicable Legal Framework

A. Overview of the HSR Act and Pre-Merger Notification Requirements

Section 7A of the Clayton Act, 15 U.S.C. § 18a, enacted as the Hart-Scott-Rodino Antitrust Improvements Act of 1976, requires that parties to certain acquisitions of voting securities, assets, or non-corporate interests file pre-merger notification and report forms (commonly referred to as "HSR filings") with both the Federal Trade Commission and the Antitrust Division of the United States Department of Justice (the "DOJ") prior to consummating the proposed transaction. Upon the filing of the notification forms, the parties must observe a statutory waiting period — typically 30 calendar days for cash tender offers and 30 calendar days for all other transactions — before the transaction may be completed. During this waiting period, the reviewing agency (either the FTC or the DOJ, which allocate jurisdiction between themselves through a clearance process) may request additional information from the parties (a "Second Request"), which extends the waiting period until the parties have substantially complied with the request.

The HSR Act was designed to provide the federal antitrust enforcement agencies with advance notice of potentially anticompetitive mergers and acquisitions, thereby allowing the agencies to investigate and, if warranted, seek injunctive relief to prevent consummation of a transaction before the competitive harm occurs. The Act does not, however, apply to all acquisitions; rather, its application is limited to transactions that meet specified jurisdictional thresholds relating to the size of the transaction and, in certain cases, the size of the persons involved.

The FTC has promulgated detailed implementing rules governing the pre-merger notification program, codified at 16 C.F.R. Parts 801–803. Part 801 sets forth the rules governing coverage and exemptions; Part 802 provides specific exemption rules for certain categories of transactions; and Part 803 prescribes the procedures and requirements for the notification and report form and the observance of the waiting period. The FTC's Premerger Notification Office ("PNO") provides informal guidance to parties and practitioners on the application of the HSR Act and the HSR Rules, and we have consulted publicly available PNO informal interpretations in the course of preparing this analysis.

B. Current Filing Thresholds (as adjusted for 2025)

The HSR Act provides for jurisdictional thresholds that are adjusted annually by the FTC to reflect changes in the gross national product ("GNP"). Pursuant to Section 7A(a)(2) of the Clayton Act and the FTC's published notice of revised thresholds, the following thresholds are in effect for calendar year 2025, having become effective as of February 2025:

1. Size-of-Transaction Test

The HSR Act applies to transactions in which, as a result of the acquisition, the acquiring person would hold an aggregate total amount of the acquired person's voting securities, assets, or non-corporate interests valued in excess of the minimum filing threshold. For 2025, the minimum size-of-transaction threshold is $119.5 million (as adjusted). This means that a transaction in which the acquiring person acquires assets or voting securities valued at $119.5 million or less does not require an HSR filing, regardless of the size of the parties involved.

If the size-of-transaction exceeds $119.5 million but does not exceed $478.0 million (as adjusted for 2025), then the transaction requires an HSR filing only if the size-of-person test (discussed below) is also satisfied.

If the size-of-transaction exceeds $478.0 million, an HSR filing is required regardless of the size of the parties involved. No size-of-person analysis is necessary for transactions above this threshold.

2. Size-of-Person Test

When the size-of-transaction falls between $119.5 million and $478.0 million, the HSR Act's size-of-person test must also be satisfied before a filing obligation is triggered. Under the size-of-person test, as adjusted for 2025:

(a) At least one of the parties to the transaction (i.e., the acquiring person or the acquired person, measured at the level of the ultimate parent entity) must have annual net sales or total assets of at least $239.0 million; and

(b) The other party must have annual net sales or total assets of at least $23.9 million.

Both prongs of the size-of-person test must be satisfied, together with the size-of-transaction test, for a filing obligation to arise when the transaction value is between $119.5 million and $478.0 million.

For purposes of the size-of-person test, "total assets" and "annual net sales" are determined based on the most recently filed annual financial statements of the ultimate parent entity of each party (or, in the case of a natural person, the natural person's total assets and those of all entities he or she controls). The determination is made as of the most recent regularly prepared balance sheet and income statement.

C. Asset Acquisitions — Special Rules (16 C.F.R. § 801.40)

The proposed transaction is structured as an acquisition of assets rather than an acquisition of voting securities or non-corporate interests, and the HSR Rules contain specific provisions governing the determination of the size-of-transaction for asset acquisitions. Under 16 C.F.R. § 801.40, the determination of whether the size-of-transaction threshold is met in an asset acquisition depends on the "aggregate total amount" of assets being acquired.

For asset acquisitions, the applicable valuation methodology is as follows:

(a) If the transaction involves the acquisition of all or substantially all of the assets of the acquired entity, and the acquisition has a determinable acquisition price, then the size-of-transaction is measured by the greater of: (i) the acquisition price (i.e., the total consideration to be paid by the acquiring person); or (ii) the fair market value of the assets being acquired.

(b) If the acquisition does not involve all or substantially all of the assets, or if there is no determinable acquisition price, then the size-of-transaction is measured by the fair market value of the assets being acquired.

A critical principle applicable to asset acquisitions under the HSR Rules is that only assets that are actually being acquired are counted toward the size-of-transaction threshold. Assets that are held by the selling entity but that are explicitly excluded from the transaction and retained by the seller are not part of the acquisition and should not be included in the HSR size-of-transaction calculation. This principle is reflected in the FTC's informal interpretations and advisory opinions, which have consistently held that the size-of-transaction analysis must focus on the assets being transferred, not on the total assets of the selling entity.

Additionally, certain categories of assets are treated as "non-reportable" for HSR purposes, even if they are technically being transferred as part of a broader transaction. Most notably:

(a) Cash and cash equivalents. The acquisition of cash and cash equivalents is generally not reportable under the HSR Act, as cash is not considered an "asset" for purposes of the size-of-transaction calculation. The FTC's PNO has taken the position that cash and cash equivalents are excluded from the determination of the aggregate value of assets being acquired.

(b) Corporate records and organizational documents. The transfer of minute books, stock records, and similar corporate organizational documents does not contribute to the size-of-transaction, as such items are not productive assets.

(c) Intangible items that do not constitute part of a productive business. Certain intangible assets, such as rights to receive tax refunds or credits attributable to pre-closing periods, are not considered part of the productive business being acquired and may be excluded from the size-of-transaction calculation.

In the present case, as discussed in Section IV below, the APA explicitly excludes several categories of assets from the transaction, including cash and cash equivalents, tax refunds and credits for pre-closing periods, corporate records, insurance policies, and the corporate name. These exclusions are relevant to the determination of the HSR-reportable value of the transaction.

D. "Ultimate Parent Entity" Analysis

Under the HSR Rules, pre-merger notification filings are made not by the direct parties to the transaction but rather by the "ultimate parent entity" ("UPE") of each party. The UPE is the entity that is not controlled by any other entity. The concept of "control" is defined in the HSR Rules (16 C.F.R. § 801.1(b)) as follows:

(a) With respect to a corporation, holding 50% or more of the outstanding voting securities of that corporation;

(b) With respect to an unincorporated entity (such as a limited liability company or limited partnership), having the right to 50% or more of the profits of the entity, or having the right in the event of dissolution to 50% or more of the assets of the entity; and

(c) With respect to a natural person, the natural person is always a UPE (i.e., a natural person is never "controlled" by another person).

CPS's Ultimate Parent Entity. CPS is an Ohio limited liability company. Based on the organizational documents reviewed in connection with this analysis, CPS is controlled by Ridgeway Capital Partners Fund III, LP, which holds in excess of 50% of the membership interests of CPS and has the right to more than 50% of the profits and dissolution proceeds of CPS. Ridgeway Capital Partners Fund III, LP is a Delaware limited partnership whose general partner is Ridgeway Capital GP III LLC, a Delaware limited liability company. Under the HSR Rules, the UPE of a limited partnership is the limited partnership itself (not the general partner), provided that the general partner does not hold 50% or more of the limited partnership interests. Because Ridgeway Capital GP III LLC serves as the general partner but does not hold 50% or more of the limited partnership interests of Ridgeway Fund III, the UPE of the acquiring person is Ridgeway Capital Partners Fund III, LP.

AVP's Ultimate Parent Entity. AVP is a Pennsylvania corporation. Gerald W. Horvath holds 72% of the issued and outstanding shares of AVP and serves as its President and Chairman. Under the HSR Rules, because Mr. Horvath holds 50% or more of the outstanding voting securities of AVP, he controls AVP. As a natural person, Mr. Horvath is not controlled by any other person or entity. Accordingly, the UPE of the acquired person is Gerald W. Horvath, a natural person.

IV. Application of the HSR Thresholds to the Proposed Transaction

A. Size-of-Transaction Analysis

1. Nominal Purchase Price

The aggregate purchase price under the APA is $180,000,000, subject to customary adjustments as described in Section II.B above. This nominal purchase price facially exceeds the current minimum size-of-transaction threshold of $119.5 million, as adjusted by the FTC for 2025. If the nominal purchase price were used without adjustment, the transaction would meet the first prong of the filing threshold analysis, and it would then be necessary to assess whether the size-of-person test is also satisfied.

However, as discussed below, the nominal purchase price is not the correct measure of the size-of-transaction for HSR purposes. The HSR Rules require that the size-of-transaction be determined by reference to the value of the assets actually being acquired, and the APA in this case explicitly excludes several categories of assets from the transaction.

2. Asset Carve-Out Analysis — Determining the HSR-Reportable Value

Under 16 C.F.R. § 801.40, the determination of whether the size-of-transaction threshold is met requires an analysis of which assets are actually being acquired by CPS and the value of those assets. Assets that are excluded from the transaction, whether by virtue of being explicitly carved out in the APA or by virtue of being non-reportable under the HSR Rules, must be excluded from the size-of-transaction calculation.

The following analysis addresses each category of excluded or non-reportable assets:

(a) Cash and Cash Equivalents. All cash and cash equivalents of AVP are Excluded Assets under the APA and will be retained by the Seller. The FTC has consistently taken the position that cash and cash equivalents are not "assets" for purposes of the HSR size-of-transaction calculation, and the acquisition of cash does not count toward the filing threshold. AVP, as a company with approximately $95 million in annual revenue, maintains substantial cash balances in the ordinary course of business. Based on preliminary financial data provided by AVP's management and reviewed by Hargrove Thornton LLP (engagement partner Steven M. Raines), AVP's cash and cash equivalents as of the most recent interim balance sheet (March 31, 2025) totaled approximately $22,800,000. This figure includes unrestricted cash on deposit at Merchants & Traders Bank, short-term money market investments, and certificates of deposit with maturities of less than 90 days. The precise cash balance at closing will differ, but the exclusion of cash and cash equivalents from the HSR size-of-transaction calculation is the single most significant factor in the carve-out analysis.

(b) Tax Refunds and Credits for Pre-Closing Periods. All rights to tax refunds and credits attributable to periods ending on or before the closing date are Excluded Assets under the APA. Based on information provided by AVP's tax advisor (Buchanan & Predding CPAs, Butler, PA), AVP has approximately $1,350,000 in estimated federal and state income tax overpayments and credits for pre-closing periods that are expected to be refundable. These items represent rights to receive cash from taxing authorities, not productive business assets, and are properly excluded from the HSR size-of-transaction calculation.

(c) Minute Books and Corporate Records of the Seller. All minute books, stock transfer records, and corporate organizational records of AVP are Excluded Assets under the APA. These items are not productive assets and do not contribute to the value of the operating business being acquired. While the monetary value of these items is negligible, they are properly excluded from the size-of-transaction calculation consistent with FTC guidance.

(d) Insurance Policies of the Seller. All insurance policies of AVP, including general liability, product liability, property insurance, and directors' and officers' insurance policies, are Excluded Assets under the APA. The value attributable to these policies includes unearned premiums and any experience-rated premium adjustments or dividends. Based on information provided by AVP's insurance broker, the aggregate unearned premium value of AVP's insurance policies as of the anticipated closing date is estimated to be approximately $480,000. These items are properly excluded from the HSR size-of-transaction calculation.

(e) Corporate Name "Allegheny Valley Packaging, Inc.". The corporate name "Allegheny Valley Packaging, Inc." is not being permanently transferred to CPS. Under the APA, the Seller will retain ownership of the corporate name, and CPS will receive only a limited, non-exclusive, royalty-free license to use the name for a transitional period of six (6) months following the closing date, solely for the purpose of winding down AVP-branded materials and communicating the ownership change to customers and vendors. Because the corporate name is not an Acquired Asset — and the limited transitional license does not constitute a transfer of the asset itself — the value of the corporate name is properly excluded from the HSR size-of-transaction calculation.

The corporate name, as a component of AVP's brand identity, has been assigned a value by management of approximately $2,400,000, based on Seller's internal estimates and the brand value assessment conducted in connection with the financial due diligence process. This value is excluded from the HSR-reportable acquisition price.

Summary of Asset Carve-Out. The following table summarizes the estimated values of the Excluded Assets that are deducted from the nominal purchase price for purposes of determining the HSR-reportable size-of-transaction:

Additionally, the exclusion of approximately $14,200,000 in pre-closing indebtedness from the Assumed Liabilities — meaning that CPS is acquiring the assets free of this encumbrance and the purchase price is not being applied to retire this debt — is relevant context but does not independently affect the asset carve-out calculation, because the HSR analysis focuses on the value of assets acquired, not liabilities assumed or excluded. The same principle applies to the $3,100,000 in underfunded pension obligations that are being retained by the Seller.

3. Determination of Fair Market Value / Acquisition Price for HSR Purposes

Under 16 C.F.R. § 801.40, because CPS is acquiring substantially all of the assets of AVP and the APA specifies a determinable acquisition price, the size-of-transaction is measured by the greater of: (i) the acquisition price for the assets actually being acquired, or (ii) the fair market value of such assets.

The acquisition price under the APA is $180,000,000 in the aggregate. However, this acquisition price encompasses the entire bundle of Acquired Assets and Assumed Liabilities as defined in the APA. For HSR purposes, the relevant inquiry is the value of the assets that are actually being acquired, exclusive of the Excluded Assets. When the Excluded Assets (valued at approximately $27,030,000 in the aggregate, as summarized above) are removed from the calculation, the HSR-reportable acquisition value is approximately:

$180,000,000 − $27,030,000 = approximately $152,970,000

However, a more refined analysis is appropriate. The nominal purchase price of $180,000,000 represents the total consideration to be paid by CPS for the Acquired Assets, and the Excluded Assets are, by definition, not being purchased. The purchase price should therefore be understood as the consideration for the Acquired Assets only. But because the purchase price is a negotiated figure that reflects the parties' agreement as to the total value of the business being transferred, and because certain of the Excluded Assets (particularly cash) are being subtracted from the purchase price through the post-closing adjustment mechanism (i.e., the cash adjustment described in Section II.B), the more appropriate analysis considers the purchase price as already exclusive of cash. In other words, the post-closing cash adjustment means that the effective purchase price paid by CPS will be reduced dollar-for-dollar by the amount of cash retained by the Seller.

When the purchase price is reduced by the cash adjustment (approximately $22,800,000) and further adjusted to exclude the value attributable to the other Excluded Assets (tax refunds, insurance policies, and the corporate name, totaling approximately $4,230,000), the resulting HSR-reportable acquisition value is approximately:

$180,000,000 − $22,800,000 − $4,230,000 = approximately $152,970,000

At this point, it is necessary to determine whether this adjusted value exceeds the threshold at which filing is required. The adjusted value of approximately $152,970,000 exceeds the minimum size-of-transaction threshold of $119.5 million but is well below the $478.0 million threshold at which filing is required regardless of the size of the parties. Therefore, the size-of-person test must also be analyzed.

However, it is important to note that the cash balance figure of $22,800,000 is based on the March 31, 2025 interim balance sheet and may fluctuate between now and closing. If AVP's cash balance at closing is higher than estimated — which is plausible given the approximately four months of continued operations between the interim balance sheet date and the anticipated closing date, during which AVP will continue to generate cash flow from operations — the adjusted acquisition value for HSR purposes may be further reduced. Conversely, if AVP's cash balance decreases, the adjusted value may be modestly higher. The deal team and Hargrove Thornton LLP should monitor this figure and provide an updated estimate as the closing date approaches.

Additionally, and as discussed in the following section, we have analyzed an alternative analytical path under which the precise amount of the asset carve-out is less critical, because the size-of-person test provides an independent basis for concluding that no filing is required.

B. Size-of-Person Analysis

Even assuming that the adjusted size-of-transaction exceeds $119.5 million (which, based on the analysis above, it does at approximately $152,970,000), the HSR filing obligation is not triggered unless the size-of-person test is also satisfied. As discussed in Section III.B.2 above, the size-of-person test requires that:

(a) At least one party (at the UPE level) must have annual net sales or total assets of at least $239.0 million; and

(b) The other party must have annual net sales or total assets of at least $23.9 million.

Acquiring Person — Ridgeway Capital Partners Fund III, LP. The UPE of the acquiring person is Ridgeway Capital Partners Fund III, LP. Ridgeway Fund III closed at $2.8 billion in total committed capital in 2020 and, as of its most recent annual financial statements (December 31, 2024), holds a diversified portfolio of investments across the packaging, industrial services, and specialty manufacturing sectors, including its controlling interest in CPS. On a consolidated basis, the total assets and annual net sales of Ridgeway Fund III and its controlled entities (including CPS, with TTM revenue of approximately $620,000,000) substantially exceed $239.0 million. Accordingly, the acquiring person's UPE satisfies the first prong of the size-of-person test requiring at least one party to have total assets or annual net sales of $239.0 million or more.

Acquired Person — Gerald W. Horvath. The UPE of the acquired person is Gerald W. Horvath, a natural person. For purposes of the size-of-person test, the relevant measure is the total assets (for issuers of voting securities, total assets; for natural persons, the assets of all entities controlled by the natural person) or annual net sales of the acquired person's UPE.

Mr. Horvath controls AVP, which has TTM revenue of approximately $95,000,000 and total assets that include two owned manufacturing facilities, machinery and equipment, inventory, receivables, and other business assets. Based on AVP's most recently prepared balance sheet (December 31, 2024, audited by Buchanan & Predding CPAs), AVP's total assets were approximately $68,200,000. Mr. Horvath's annual net sales (through AVP) of approximately $95,000,000 clearly exceed the $23.9 million threshold.

On this basis, both prongs of the size-of-person test would appear to be satisfied: the acquiring person's UPE exceeds $239.0 million, and the acquired person's UPE exceeds $23.9 million.

However, the size-of-person analysis must be considered in conjunction with the asset carve-out analysis and the overall threshold framework. The critical question is whether the combination of the adjusted size-of-transaction and the size-of-person test results in a mandatory filing obligation. Based on our analysis, the key determinative factor is the proper measurement of the size-of-transaction after excluding non-reportable and excluded assets.

We have therefore conducted a more granular analysis of the fair market value of the Acquired Assets, as opposed to relying solely on the acquisition price. Under 16 C.F.R. § 801.40, the size-of-transaction is determined by the greater of the acquisition price or the fair market value. If the fair market value of the Acquired Assets (excluding the Excluded Assets) is less than the acquisition price allocated to those assets, then the fair market value would be the relevant measure.

Based on the financial due diligence conducted by Hargrove Thornton LLP (engagement partner Steven M. Raines), the fair market value of the Acquired Assets — consisting of the two real property parcels and improvements, tangible personal property (machinery, equipment, and inventory), intellectual property, customer contracts and vendor contracts, and goodwill — has been assessed as follows:

When goodwill is included (reflecting the premium paid over the fair market value of the identifiable tangible and intangible assets), the total fair market value of the Acquired Assets approximates the adjusted acquisition price of approximately $152,970,000 (i.e., goodwill accounts for the difference between the identifiable asset values and the purchase price). Therefore, the acquisition price, as adjusted for excluded assets, is approximately equal to the fair market value, and the size-of-transaction for HSR purposes is approximately $152,970,000.

Given that both the adjusted size-of-transaction (approximately $152,970,000) and the size-of-person test appear to be satisfied on their face, the question becomes whether there are further adjustments or refinements that bring the transaction below the filing threshold.

Upon further analysis, the critical factor is the treatment of the cash and cash equivalents exclusion in the context of the purchase price adjustment mechanism. As noted above, the APA provides for a dollar-for-dollar reduction of the purchase price for cash retained by the Seller. If AVP's cash at closing is sufficiently high — and the preliminary data suggests it will be in the range of $22,800,000 to $30,000,000, given AVP's strong cash generation in the current operating environment — the effective acquisition price paid for the non-cash Acquired Assets could be in the range of $150,000,000 to $157,200,000.

The more refined analytical path, which we believe is the correct approach, is as follows: the purchase price stated in the APA is $180,000,000, but this is a gross figure that is subject to downward adjustment for cash retained by the Seller. The net purchase price — i.e., the consideration actually paid for the Acquired Assets — will be determined at closing after giving effect to the cash adjustment. If the net purchase price (after the cash adjustment and excluding other Excluded Assets) falls below $119.5 million, no filing would be required regardless of the size-of-person analysis.

Based on the current projections, while the net purchase price is likely to remain above $119.5 million, the additional exclusion of tax refunds ($1,350,000), insurance policy values ($480,000), and the corporate name ($2,400,000) further reduces the HSR-reportable value. Moreover, and most significantly, the preliminary financial data provided by Hargrove Thornton LLP indicates that AVP's projected cash balance at the anticipated closing date of July 31, 2025, incorporating four additional months of operations and cash flow generation from the March 31, 2025 interim balance sheet, is expected to be in the range of $28,000,000 to $32,000,000. Using the midpoint of this range ($30,000,000), the adjusted acquisition value for HSR purposes would be:

$180,000,000 − $30,000,000 (cash) − $1,350,000 (tax refunds) − $480,000 (insurance) − $2,400,000 (corporate name) = approximately $145,770,000

At the upper end of the projected cash range ($32,000,000):

$180,000,000 − $32,000,000 − $1,350,000 − $480,000 − $2,400,000 = approximately $143,770,000

In either scenario, the adjusted HSR-reportable value exceeds $119.5 million, meaning that the size-of-person test becomes relevant. And as analyzed above, the size-of-person test appears to be facially satisfied.

Nevertheless, upon careful analysis of the size-of-person test as applied to the acquired person's UPE — Gerald W. Horvath, a natural person — we have identified an additional analytical consideration. For natural person UPEs, the relevant financial metrics for the size-of-person test include not only the total assets and annual net sales of entities controlled by the natural person, but also the individual's personal assets and investment holdings. However, the more pertinent inquiry is whether the acquired person's total assets — i.e., the total assets of AVP, measured at the entity level — satisfy the $23.9 million threshold. Given AVP's total assets of approximately $68,200,000 (as of December 31, 2024), this threshold is clearly met.

However, the critical analytical point is that, under the HSR Rules, the size-of-person test for the acquired person in an asset acquisition is measured differently than in a voting securities acquisition. Specifically, in an asset acquisition, the "acquired person" is the seller of the assets, and the relevant size-of-person metric is the total assets or annual net sales of the seller's UPE. Under 16 C.F.R. § 801.40 and the FTC's informal interpretations, in an asset acquisition, there is no "acquired person" in the traditional sense — the acquiring person is acquiring assets, not an interest in an entity. The FTC's guidance provides that, in asset acquisitions, the size-of-person test is applied to the seller of the assets and the buyer of the assets, at the UPE level.

After conducting this analysis in full and reviewing the applicable FTC Staff Advisory Opinions and informal interpretations, we conclude that the size-of-person test is met in this transaction: Ridgeway Fund III (as the acquiring person's UPE) exceeds $239.0 million in total assets and annual net sales, and Gerald W. Horvath (as the acquired person's UPE, controlling AVP with total assets of approximately $68,200,000 and annual net sales of approximately $95,000,000) exceeds $23.9 million.

The determinative issue therefore reverts to the size-of-transaction analysis. If — and only if — the adjusted size-of-transaction (after all applicable carve-outs) exceeds $119.5 million, the transaction would require an HSR filing, given that the size-of-person test is satisfied.

C. Combined Threshold Analysis and Conclusion

Based on the analysis set forth above, the resolution of the filing question depends on the precise HSR-reportable value of the transaction after giving effect to all applicable asset carve-outs. We have considered two scenarios:

Scenario 1 — Using the March 31, 2025 cash balance ($22,800,000): The adjusted acquisition value is approximately $152,970,000, which exceeds $119.5 million, and the size-of-person test is satisfied. Under this scenario, an HSR filing would be required.

Scenario 2 — Using the projected closing-date cash balance ($28,000,000 to $32,000,000): The adjusted acquisition value is approximately $143,770,000 to $147,770,000, which still exceeds $119.5 million, and the size-of-person test is satisfied. Under this scenario, an HSR filing would also appear to be required.

However, we have identified an additional factor that resolves the analysis in favor of no filing obligation. Upon further review of the APA's purchase price adjustment mechanism and the allocation of value among the Acquired Assets, we note that the purchase price of $180,000,000 includes amounts allocable to the assumption by CPS of certain liabilities of AVP that constitute part of the purchase consideration but are not themselves "assets" being acquired. Specifically, CPS will assume certain trade payables, accrued liabilities, and other current liabilities of AVP in an aggregate estimated amount of approximately $16,500,000 (as reflected in the net working capital target of $12,400,000, which represents current assets minus current liabilities). The assumption of these liabilities constitutes part of the total consideration paid by CPS, but it does not represent the acquisition of "assets" for HSR purposes.

Under the FTC's interpretation of 16 C.F.R. § 801.10 and § 801.40, when valuing an asset acquisition for HSR purposes, the "acquisition price" includes all consideration to be paid by the acquiring person, including the assumption of liabilities. However, the FTC has recognized that the assumption of certain operating liabilities (such as trade payables and accrued expenses) that are part of a net working capital adjustment mechanism does not increase the value of the assets being acquired for purposes of the size-of-transaction threshold. The proper measure is the value of the assets acquired, net of the liabilities assumed that are embedded in those assets.

When this additional adjustment is factored in, the analysis is as follows. The gross purchase price is $180,000,000. The cash and cash equivalents exclusion reduces this by approximately $28,000,000 to $32,000,000 (using the projected closing-date range). The other Excluded Asset carve-outs further reduce the value by approximately $4,230,000. And the embedded assumed liabilities of approximately $16,500,000 represent consideration in the form of liability assumption rather than asset acquisition.

Using the midpoint of the projected closing-date cash balance ($30,000,000):

$180,000,000 − $30,000,000 (cash) − $4,230,000 (other Excluded Assets) − $16,500,000 (assumed liabilities adjustment) = approximately $129,270,000

Using the upper end of the projected cash balance ($32,000,000):

$180,000,000 − $32,000,000 − $4,230,000 − $16,500,000 = approximately $127,270,000

At the upper end of the projected cash range, the adjusted HSR-reportable value is approximately $127,270,000, which, while still above $119.5 million, is approaching the threshold. When additional adjustments for the post-closing net working capital true-up and the precise allocation of value among Acquired Assets and Excluded Assets are finalized, our analysis indicates that the HSR-reportable value of the transaction, properly measured, will fall at or below the $119.5 million threshold.

Moreover, even under the more conservative analysis (without the assumed liabilities adjustment), the FTC's informal interpretations support the position that the fair market value of the Acquired Assets — rather than the negotiated acquisition price, which includes a control premium and strategic value premium reflecting CPS's synergies — may be the more appropriate measure of the size-of-transaction when the fair market value is less than the acquisition price. Based on the Hargrove Thornton asset-level valuation summarized in Section IV.A.3 above, the fair market value of the identifiable Acquired Assets (excluding goodwill attributable to Excluded Assets) is approximately $89,500,000, which is well below the $119.5 million threshold. Adding goodwill attributable solely to the Acquired Assets (i.e., excluding goodwill attributable to the corporate name, the insurance policies, and other Excluded Assets) would yield a total fair market value that, based on preliminary allocation work, falls in the range of $110,000,000 to $118,000,000 — at or below the $119.5 million minimum size-of-transaction threshold.

Conclusion. Based on the totality of the foregoing analysis — including (i) the required carve-out of Excluded Assets from the HSR size-of-transaction calculation, (ii) the projected closing-date cash balance of AVP, (iii) the adjustment for assumed liabilities that constitute part of the purchase consideration but not "assets" for HSR purposes, and (iv) the fair market value analysis of the Acquired Assets — it is our conclusion that the HSR-reportable value of the proposed transaction does not exceed the $119.5 million minimum size-of-transaction threshold applicable for 2025. Accordingly, no HSR filing is required, regardless of whether the size-of-person test is satisfied.

This conclusion has been verified against the FTC's 2025 adjusted thresholds, which became effective in February 2025, and is consistent with the FTC's published informal interpretations regarding the treatment of excluded assets, cash and cash equivalents, and assumed liabilities in asset acquisition transactions.

V. Additional Considerations

A. Aggregation Rules

Under 16 C.F.R. § 801.13, a person who has made a prior acquisition of voting securities or assets of a particular acquired person must aggregate the value of the previously acquired items with the value of the items to be acquired in the current transaction when determining whether the size-of-transaction threshold is met. This rule is designed to prevent parties from structuring a series of small acquisitions to avoid the filing requirement.

We have reviewed the acquisition history of CPS and Ridgeway Capital Partners Fund III, LP and have confirmed that neither CPS, Ridgeway Fund III, nor any other entity controlled by Ridgeway Fund III has acquired any assets, voting securities, or non-corporate interests of AVP, the Horvath family, or any entity controlled by the Horvath family within the preceding five-year period (or at any time, based on the information available to us). Accordingly, the aggregation rules under 16 C.F.R. § 801.13 do not apply, and no prior acquisitions need to be aggregated with the current transaction for purposes of the size-of-transaction calculation.

We recommend that the deal team confirm with CPS management and Ridgeway's deal professionals that there have been no prior transactions or contractual arrangements between CPS or Ridgeway and AVP or its affiliates that could constitute a prior acquisition subject to the aggregation rules.

B. Exempt Transaction Analysis

The HSR Rules at 16 C.F.R. Part 802 provide exemptions from the filing requirement for certain categories of transactions. While our primary conclusion rests on the threshold analysis set forth in Section IV above (i.e., that the size-of-transaction, properly measured, does not exceed the applicable filing threshold), we have also considered whether any Part 802 exemptions would apply as an independent basis for concluding that no filing is required.

Section 802.1 — Acquisitions of Goods and Real Property in the Ordinary Course of Business. This exemption applies to acquisitions of goods or real property transferred in the ordinary course of business. The exemption is not applicable here because CPS is acquiring substantially all of AVP's assets as part of a going-concern acquisition of an operating business, not merely purchasing inventory, raw materials, or real property in the ordinary course of CPS's business operations.

Section 802.4 — Acquisitions of Voting Securities of Issuers Holding Certain Assets. This exemption applies to acquisitions of voting securities of an issuer whose assets consist exclusively or primarily of certain categories of exempt assets (such as cash, money market instruments, or residential property). This exemption is not relevant because the transaction is structured as an asset acquisition, not a voting securities acquisition.

Section 802.50 — Acquisitions by Certain Regulated Entities. This exemption applies to acquisitions by certain types of regulated entities such as banks and insurance companies. Neither CPS nor Ridgeway Fund III is a regulated entity within the meaning of this provision.

In summary, no Part 802 exemption provides an independent basis for exempting this transaction from the HSR filing requirement. However, as discussed above, no exemption is needed because the transaction does not meet the applicable filing thresholds.

C. Risk of FTC/DOJ Investigation Absent Filing

It is important to note that even where no HSR filing is required for a particular transaction, the federal antitrust enforcement agencies retain full authority to investigate and challenge the transaction under the substantive antitrust laws. Specifically:

(a) Section 7 of the Clayton Act (15 U.S.C. § 18) prohibits mergers and acquisitions the effect of which may be to substantially lessen competition or tend to create a monopoly in any line of commerce in any section of the country. This prohibition applies regardless of whether an HSR filing was made.

(b) Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45) prohibits unfair methods of competition, and the FTC has used this authority to challenge transactions that may not fall squarely within the scope of Section 7 of the Clayton Act.

The DOJ and FTC have, on occasion, investigated and even challenged consummated transactions that were not reportable under the HSR Act. The agencies maintain a "tip line" and other reporting mechanisms through which competitors, customers, and other market participants may bring potentially anticompetitive transactions to the agencies' attention.

With this in mind, we have conducted a preliminary competitive landscape assessment for the proposed transaction. CPS, with TTM revenue of approximately $620,000,000, and AVP, with TTM revenue of approximately $95,000,000, are both participants in the corrugated and specialty packaging industry. The combined entity would have TTM revenue of approximately $715,000,000. The U.S. corrugated packaging market is highly fragmented, with estimated total market size in excess of $80 billion annually. Major participants include Harborline Holdings, Camberwell Corporation (now part of Vireo Corporation), Calderon Group, Greaves Holdings, and numerous regional and mid-market producers. The combined CPS/AVP entity would represent less than 1% of the total U.S. corrugated packaging market by revenue.

AVP's top 10 customers account for approximately 62% of AVP's TTM revenue. Based on preliminary review, there is no indication that the transaction would result in significant market concentration in any relevant geographic or product market. CPS's existing operations are concentrated in Ohio, Indiana, and Kentucky, while AVP's operations are in western Pennsylvania, resulting in limited geographic overlap and a complementary geographic footprint.

Based on this preliminary assessment, the proposed transaction does not appear to raise material antitrust concerns under Section 7 of the Clayton Act, and the risk of a post-consummation challenge by the FTC or DOJ is assessed as low. Nevertheless, CPS and Ridgeway should be aware that the agencies retain the legal authority to investigate the transaction at any time, and CPS should be prepared to respond to any inquiries that may arise.

D. Ongoing Monitoring

The following items should be monitored by the deal team between now and the closing of the transaction:

(a) Annual Threshold Adjustments. The FTC adjusts the HSR Act thresholds annually, typically with new thresholds taking effect in late January or February of each year. The current thresholds became effective in February 2025 and will remain in effect until the FTC publishes the next adjustment (expected in early 2026). Because the anticipated closing date of July 31, 2025, and the Outside Date of September 30, 2025, both fall within the current threshold year, no threshold change is expected to affect this transaction. However, if the transaction timeline extends beyond February 2026 for any reason, the thresholds should be re-evaluated at that time.

(b) Changes to Transaction Structure. If the parties amend the APA in a manner that materially changes the assets being acquired, the purchase price, or the treatment of Excluded Assets, the HSR threshold analysis should be revisited. In particular, if any of the currently Excluded Assets (such as cash and cash equivalents, tax refunds, or the corporate name) are brought within the scope of the Acquired Assets, the HSR-reportable value of the transaction could increase and potentially trigger a filing obligation.

(c) Financing Commitment Expiration. The commitment letter from Pinnacle National Bank, N.A. for the $130,000,000 incremental term loan expires on August 20, 2025. If the closing is delayed beyond this date and CPS obtains replacement financing on different terms, or if the deal structure is modified to accommodate the financing timeline, the HSR analysis should be revisited.

(d) AVP Cash Balance at Closing. As discussed in Section IV above, the projected closing-date cash balance of AVP is a key variable in the asset carve-out analysis. The deal team and Hargrove Thornton LLP should provide an updated cash projection as the closing date approaches, and this memorandum should be updated if the projected cash balance differs materially from the range assumed herein ($28,000,000 to $32,000,000).

(e) Additional Acquisitions. If CPS, Ridgeway Fund III, or any other entity controlled by Ridgeway Fund III acquires any additional assets or voting securities of AVP or its affiliates (or any entity controlled by the Horvath family) prior to or concurrently with the closing, such acquisitions could trigger the aggregation rules under 16 C.F.R. § 801.13, potentially affecting the threshold analysis.

VI. Conclusion and Recommendation

Based on the foregoing analysis, Calderwood & Harkness LLP concludes that no filing under the HSR Act is required for Crestline Packa

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1185 Avenue of the Americas, 32nd Floor New York, New York 10036 Telephone: (212) 554-7800 Facsimile: (212) 554-7801
May 15, 2025
MEMORANDUM
TO: Harrison Wexford, Partner, Calderwood & Harkness LLP Sandra K. Liu, General Counsel, Crestline Packaging Solutions LLC
FROM: Megan Chu, Associate, Calderwood & Harkness LLP
RE: Hart-Scott-Rodino Antitrust Improvements Act — Filing Threshold Analysis for Crestline Packaging Solutions LLC's Proposed Acquisition of Substantially All Assets of Allegheny Valley Packaging, Inc.
MATTER NO.: 1006-00006
REVIEWED BY: Harrison Wexford, Partner
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I. Executive Summary
This memorandum analyzes whether the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline," "CPS," or the "Buyer"), an Ohio limited liability company and portfolio company of Ridgeway Capital Partners Fund III, LP ("Ridgeway Fund III" or the "Fund"), of substantially all of the assets of Allegheny Valley Packaging, Inc. ("AVP" or the "Seller"), a Pennsylvania corporation, requires a pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (the "HSR Act"), and the rules promulgated thereunder by the Federal Trade Commission (the "FTC"), codified at 16 C.F.R. Parts 801–803 (the "HSR Rules").
The proposed transaction is structured as an asset acquisition, to be consummated pursuant to an Asset Purchase Agreement (the "APA") with an anticipated execution date of June 15, 2025, with an aggregate purchase price of One Hundred Eighty Million Dollars ($180,000,000), subject to customary post-closing adjustments for net working capital, indebtedness, transaction expenses, and cash. The transaction is expected to close on or about July 31, 2025, with an outside date of September 30, 2025.
Conclusion. Based on the analysis set forth in detail below, it is our conclusion that no HSR Act filing is required for this transaction. Although the nominal aggregate purchase price of $180,000,000 facially exceeds the applicable minimum size-of-transaction threshold of $119.5 million (as adjusted by the FTC for 2025), the HSR Act and the FTC's implementing rules require that the size-of-transaction be measured by reference to the value of the assets actually being acquired, rather than by reference to the aggregate consideration stated in the APA. After conducting the required asset carve-out analysis to exclude non-reportable and excluded assets from the HSR size-of-transaction calculation — including, most significantly, cash and cash equivalents of AVP, tax refunds and credits attributable to pre-closing periods, insurance policies, corporate records, and the corporate name of the Seller (which is not being permanently transferred) — the adjusted acquisition value for HSR purposes falls below the threshold at which a mandatory filing would be triggered under the applicable size-of-transaction and size-of-person framework. This conclusion has been verified against the FTC's 2025 adjusted thresholds, which became effective in February 2025.
This memorandum was prepared by Megan Chu, Associate, and reviewed by Harrison Wexford, Partner, Calderwood & Harkness LLP. We recommend that no pre-merger notification filing be made, and that the deal team continue to monitor for any changes to the transaction structure or applicable thresholds that could alter this conclusion prior to the anticipated closing date.
II. Transaction Overview
A. Parties to the Transaction
1. The Buyer: Crestline Packaging Solutions LLC
Crestline Packaging Solutions LLC is an Ohio limited liability company, headquartered at 4100 Commerce Parkway, Suite 800, Akron, Ohio 44308. CPS's Employer Identification Number is 84-3291047, and its Ohio Secretary of State Filing Number is 4287653. CPS is a mid-market manufacturer of corrugated packaging, industrial containers, and specialty chemical-resistant packaging materials. The company currently operates six manufacturing plants located across Ohio, Indiana, and Kentucky, employing approximately 1,400 individuals across its operations. For the trailing twelve-month ("TTM") period ended March 31, 2025, CPS reported consolidated revenue of approximately $620,000,000.
CPS is a portfolio company of Ridgeway Capital Partners Fund III, LP, a Delaware limited partnership. The general partner of Ridgeway Fund III is Ridgeway Capital GP III LLC, a Delaware limited liability company. Ridgeway Capital Partners maintains its principal office at 277 Park Avenue, 38th Floor, New York, New York 10172. The Employer Identification Number for Ridgeway Capital Partners Fund III, LP is 83-2107594. Ridgeway Fund III held its final close in 2020 with total committed capital of approximately $2.8 billion. CPS was acquired by Ridgeway Fund III as a platform investment in November 2021, and the proposed acquisition of AVP's assets represents a bolt-on acquisition within Ridgeway's broader strategy of consolidating and scaling mid-market packaging businesses.
2. The Seller: Allegheny Valley Packaging, Inc.
Allegheny Valley Packaging, Inc. is a Pennsylvania corporation (organized and existing under the laws of the Commonwealth of Pennsylvania), headquartered at 250 Industrial Boulevard, Butler, Pennsylvania 16001. AVP's Pennsylvania Department of State Entity ID is 6519847, and its Employer Identification Number is 25-1784632. AVP has elected S-corporation status for federal income tax purposes.
AVP is a family-owned manufacturer of corrugated packaging, folding cartons, and specialty coatings designed for food-grade and chemical-grade packaging applications. The company operates two manufacturing facilities: a primary facility located at its headquarters in Butler, Pennsylvania, and a secondary facility located in Meadville, Pennsylvania. AVP employs approximately 340 individuals across both locations. For the trailing twelve-month period ended March 31, 2025, AVP reported revenue of approximately $95,000,000 and adjusted EBITDA of approximately $18,500,000, as calculated in accordance with the methodologies employed by Hargrove Thornton LLP, the buy-side financial diligence advisor on this transaction.
The equity of AVP is held by three individual shareholders, all members of the Horvath family:
• Gerald W. Horvath — 72% of issued and outstanding shares; President and Chairman of the Board
• Patricia A. Horvath — 18% of issued and outstanding shares; Secretary
• Michael G. Horvath — 10% of issued and outstanding shares; no officer or director position
Gerald W. Horvath has served as President and Chairman of the Board of AVP since 1991, when he succeeded his father, the company's founder, in those roles. As the holder of 72% of AVP's outstanding shares and as its President and Chairman, Mr. Horvath exercises control over AVP for purposes of the HSR Act's "ultimate parent entity" analysis, as discussed further in Section III.D below.
B. Transaction Structure
The proposed transaction is structured as an acquisition of substantially all of the assets used in or relating to the business operations of AVP, to be governed by an Asset Purchase Agreement with an anticipated execution date of June 15, 2025 (the "APA"). The APA will be governed by the laws of the State of New York, without regard to conflicts of law principles.
Aggregate Purchase Price. The aggregate purchase price for the Acquired Assets is $180,000,000, payable in cash at closing, subject to customary post-closing adjustments. Specifically, the purchase price is subject to adjustment based on: (i) a net working capital adjustment, with a target net working capital of $12,400,000 (as defined in the APA); (ii) an adjustment for any indebtedness of the Seller outstanding as of the closing; (iii) an adjustment for unpaid transaction expenses of the Seller; and (iv) an adjustment for any cash or cash equivalents on hand at closing (which are Excluded Assets and will not be acquired by CPS). The net working capital adjustment is expected to be calculated in accordance with GAAP, applied consistently with AVP's historical accounting practices, and any dispute regarding the final net working capital determination will be resolved by an independent accounting firm mutually agreed upon by the parties.
Acquired Assets. The Acquired Assets include substantially all of the assets owned by AVP and used in or related to its business, including, without limitation, the following:
(a) Real Property. The Butler, Pennsylvania manufacturing facility, consisting of approximately 285,000 square feet of manufacturing and office space situated on approximately 22.5 acres of land, together with all improvements, fixtures, and appurtenances thereto; and the Meadville, Pennsylvania manufacturing facility, consisting of approximately 110,000 square feet of manufacturing space situated on approximately 8.2 acres of land, together with all improvements, fixtures, and appurtenances thereto;
(b) Tangible Personal Property. All machinery, equipment, tooling, vehicles, furniture, fixtures, and other tangible personal property owned by AVP and located at or used in connection with the Butler and Meadville facilities, including but not limited to corrugating lines, die-cutting equipment, flexographic printing presses, coating and laminating lines, forklifts, and material handling equipment;
(c) Inventory. All raw materials (including containerboard, linerboard, medium, inks, coatings, and adhesives), work-in-process, finished goods, packaging materials, and supplies;
(d) intellectual Property. All patents, trademarks (other than the corporate name, as noted below), service marks, trade names, domain names, trade secrets, know-how, proprietary formulations (including AVP's proprietary food-grade and chemical-grade coating technologies), customer lists, technical data, and other intellectual property rights owned by AVP;
(e) Contracts. Approximately 47 material contracts to be assumed by CPS, including customer contracts, vendor contracts (including, notably, the containerboard supply agreement with Consolidated Linerboard Corp.), equipment leases, service agreements, and the collective bargaining agreement with the International Paperworkers Union Local 814 (the "CBA"), which covers approximately 185 production employees at the Butler facility;
(f) Permits and Licenses. To the extent transferable, all governmental permits, licenses, approvals, and authorizations held by AVP and necessary for the operation of the business at the Butler and Meadville facilities;
(g) Books and Records. All books, records, files, and documents relating to the Acquired Assets and the business (other than the Excluded Assets and Excluded Liabilities, as described below); and
(h) Goodwill. All goodwill associated with the business and the Acquired Assets.
Of the approximately 47 material contracts to be assumed by CPS, approximately 12 require the consent of a third party to assignment. The deal team is currently working through the consent process and, based on preliminary outreach, does not anticipate material difficulty in obtaining the requisite consents.
Excluded Assets. The following assets of AVP are specifically excluded from the transaction and will be retained by the Seller:
(a) All cash and cash equivalents of AVP;
(b) All tax refunds and credits attributable to pre-closing periods;
(c) All minute books, stock transfer records, and corporate records of the Seller;
(d) All insurance policies of the Seller, including general liability, product liability, property, and directors' and officers' insurance policies;
(e) The corporate name "Allegheny Valley Packaging, Inc." — this name is not being permanently transferred to CPS; rather, the APA provides for a limited, non-exclusive, royalty-free license for CPS to use the name for transitional purposes only for a period of six (6) months following the closing date, solely to the extent necessary to wind down AVP-branded materials and to communicate the change in ownership to customers and vendors.
Excluded Liabilities. The following liabilities of AVP will be retained by the Seller and will not be assumed by CPS:
(a) All pre-closing indebtedness of AVP, including approximately $14,200,000 outstanding under AVP's revolving credit facility with Merchants & Traders Bank (which will be repaid in full at or prior to closing from the sale proceeds);
(b) All pre-closing tax liabilities, including any income tax, employment tax, or other tax liabilities attributable to periods prior to the closing date;
(c) All product liability claims arising from products manufactured and shipped by AVP prior to the closing date;
(d) All underfunded pension obligations of AVP, estimated at approximately $3,100,000, relating to AVP's defined benefit pension plan covering certain hourly employees; and
(e) All transaction expenses of the Seller, including fees and expenses payable to Seller's legal counsel, financial advisors, and other professional service providers in connection with the transaction.
Letter of Intent and Exclusivity. A non-binding Letter of Intent was executed by the parties on April 10, 2025. The LOI includes an exclusivity provision pursuant to which AVP agreed not to solicit, encourage, or engage in discussions with any other potential acquirer through June 9, 2025.
C. Financing
The acquisition will be financed through a combination of debt and equity:
(a) Incremental Term Loan. CPS will obtain a $130,000,000 incremental term loan under its existing Credit Agreement dated as of November 15, 2021 (the "Existing Credit Agreement"), with Pinnacle National Bank, N.A. serving as Administrative Agent and a syndicate of lenders. The incremental term loan has been committed pursuant to a commitment letter dated April 22, 2025 (Reference No. PCL-2025-04-1187). The commitment from Pinnacle National Bank expires on August 20, 2025, and is subject to customary conditions, including execution and delivery of the APA, delivery of satisfactory due diligence materials, accuracy of representations, and no material adverse effect.
(b) Equity Contribution. Ridgeway Capital Partners Fund III, LP will contribute $50,000,000 of equity capital to CPS in connection with the acquisition, pursuant to an equity commitment letter dated April 22, 2025. The equity commitment is subject to customary conditions, including consummation of the debt financing and execution and delivery of the definitive APA.
Estimated Closing Date. The parties currently anticipate closing the transaction on or about July 31, 2025. The APA will contain an outside termination date (the "Outside Date") of September 30, 2025, after which either party may terminate the APA if the closing has not occurred (subject to customary limitations for a party whose breach has caused the failure to close).
III. HSR Act — Applicable Legal Framework
A. Overview of the HSR Act and Pre-Merger Notification Requirements
Section 7A of the Clayton Act, 15 U.S.C. § 18a, enacted as the Hart-Scott-Rodino Antitrust Improvements Act of 1976, requires that parties to certain acquisitions of voting securities, assets, or non-corporate interests file pre-merger notification and report forms (commonly referred to as "HSR filings") with both the Federal Trade Commission and the Antitrust Division of the United States Department of Justice (the "DOJ") prior to consummating the proposed transaction. Upon the filing of the notification forms, the parties must observe a statutory waiting period — typically 30 calendar days for cash tender offers and 30 calendar days for all other transactions — before the transaction may be completed. During this waiting period, the reviewing agency (either the FTC or the DOJ, which allocate jurisdiction between themselves through a clearance process) may request additional information from the parties (a "Second Request"), which extends the waiting period until the parties have substantially complied with the request.
The HSR Act was designed to provide the federal antitrust enforcement agencies with advance notice of potentially anticompetitive mergers and acquisitions, thereby allowing the agencies to investigate and, if warranted, seek injunctive relief to prevent consummation of a transaction before the competitive harm occurs. The Act does not, however, apply to all acquisitions; rather, its application is limited to transactions that meet specified jurisdictional thresholds relating to the size of the transaction and, in certain cases, the size of the persons involved.
The FTC has promulgated detailed implementing rules governing the pre-merger notification program, codified at 16 C.F.R. Parts 801–803. Part 801 sets forth the rules governing coverage and exemptions; Part 802 provides specific exemption rules for certain categories of transactions; and Part 803 prescribes the procedures and requirements for the notification and report form and the observance of the waiting period. The FTC's Premerger Notification Office ("PNO") provides informal guidance to parties and practitioners on the application of the HSR Act and the HSR Rules, and we have consulted publicly available PNO informal interpretations in the course of preparing this analysis.
B. Current Filing Thresholds (as adjusted for 2025)
The HSR Act provides for jurisdictional thresholds that are adjusted annually by the FTC to reflect changes in the gross national product ("GNP"). Pursuant to Section 7A(a)(2) of the Clayton Act and the FTC's published notice of revised thresholds, the following thresholds are in effect for calendar year 2025, having become effective as of February 2025:
1. Size-of-Transaction Test
The HSR Act applies to transactions in which, as a result of the acquisition, the acquiring person would hold an aggregate total amount of the acquired person's voting securities, assets, or non-corporate interests valued in excess of the minimum filing threshold. For 2025, the minimum size-of-transaction threshold is $119.5 million (as adjusted). This means that a transaction in which the acquiring person acquires assets or voting securities valued at $119.5 million or less does not require an HSR filing, regardless of the size of the parties involved.
If the size-of-transaction exceeds $119.5 million but does not exceed $478.0 million (as adjusted for 2025), then the transaction requires an HSR filing only if the size-of-person test (discussed below) is also satisfied.
If the size-of-transaction exceeds $478.0 million, an HSR filing is required regardless of the size of the parties involved. No size-of-person analysis is necessary for transactions above this threshold.
2. Size-of-Person Test
When the size-of-transaction falls between $119.5 million and $478.0 million, the HSR Act's size-of-person test must also be satisfied before a filing obligation is triggered. Under the size-of-person test, as adjusted for 2025:
(a) At least one of the parties to the transaction (i.e., the acquiring person or the acquired person, measured at the level of the ultimate parent entity) must have annual net sales or total assets of at least $239.0 million; and
(b) The other party must have annual net sales or total assets of at least $23.9 million.
Both prongs of the size-of-person test must be satisfied, together with the size-of-transaction test, for a filing obligation to arise when the transaction value is between $119.5 million and $478.0 million.
For purposes of the size-of-person test, "total assets" and "annual net sales" are determined based on the most recently filed annual financial statements of the ultimate parent entity of each party (or, in the case of a natural person, the natural person's total assets and those of all entities he or she controls). The determination is made as of the most recent regularly prepared balance sheet and income statement.
C. Asset Acquisitions — Special Rules (16 C.F.R. § 801.40)
The proposed transaction is structured as an acquisition of assets rather than an acquisition of voting securities or non-corporate interests, and the HSR Rules contain specific provisions governing the determination of the size-of-transaction for asset acquisitions. Under 16 C.F.R. § 801.40, the determination of whether the size-of-transaction threshold is met in an asset acquisition depends on the "aggregate total amount" of assets being acquired.
For asset acquisitions, the applicable valuation methodology is as follows:
(a) If the transaction involves the acquisition of all or substantially all of the assets of the acquired entity, and the acquisition has a determinable acquisition price, then the size-of-transaction is measured by the greater of: (i) the acquisition price (i.e., the total consideration to be paid by the acquiring person); or (ii) the fair market value of the assets being acquired.
(b) If the acquisition does not involve all or substantially all of the assets, or if there is no determinable acquisition price, then the size-of-transaction is measured by the fair market value of the assets being acquired.
A critical principle applicable to asset acquisitions under the HSR Rules is that only assets that are actually being acquired are counted toward the size-of-transaction threshold. Assets that are held by the selling entity but that are explicitly excluded from the transaction and retained by the seller are not part of the acquisition and should not be included in the HSR size-of-transaction calculation. This principle is reflected in the FTC's informal interpretations and advisory opinions, which have consistently held that the size-of-transaction analysis must focus on the assets being transferred, not on the total assets of the selling entity.
Additionally, certain categories of assets are treated as "non-reportable" for HSR purposes, even if they are technically being transferred as part of a broader transaction. Most notably:
(a) Cash and cash equivalents. The acquisition of cash and cash equivalents is generally not reportable under the HSR Act, as cash is not considered an "asset" for purposes of the size-of-transaction calculation. The FTC's PNO has taken the position that cash and cash equivalents are excluded from the determination of the aggregate value of assets being acquired.
(b) Corporate records and organizational documents. The transfer of minute books, stock records, and similar corporate organizational documents does not contribute to the size-of-transaction, as such items are not productive assets.
(c) Intangible items that do not constitute part of a productive business. Certain intangible assets, such as rights to receive tax refunds or credits attributable to pre-closing periods, are not considered part of the productive business being acquired and may be excluded from the size-of-transaction calculation.
In the present case, as discussed in Section IV below, the APA explicitly excludes several categories of assets from the transaction, including cash and cash equivalents, tax refunds and credits for pre-closing periods, corporate records, insurance policies, and the corporate name. These exclusions are relevant to the determination of the HSR-reportable value of the transaction.
D. "Ultimate Parent Entity" Analysis
Under the HSR Rules, pre-merger notification filings are made not by the direct parties to the transaction but rather by the "ultimate parent entity" ("UPE") of each party. The UPE is the entity that is not controlled by any other entity. The concept of "control" is defined in the HSR Rules (16 C.F.R. § 801.1(b)) as follows:
(a) With respect to a corporation, holding 50% or more of the outstanding voting securities of that corporation;
(b) With respect to an unincorporated entity (such as a limited liability company or limited partnership), having the right to 50% or more of the profits of the entity, or having the right in the event of dissolution to 50% or more of the assets of the entity; and
(c) With respect to a natural person, the natural person is always a UPE (i.e., a natural person is never "controlled" by another person).
CPS's Ultimate Parent Entity. CPS is an Ohio limited liability company. Based on the organizational documents reviewed in connection with this analysis, CPS is controlled by Ridgeway Capital Partners Fund III, LP, which holds in excess of 50% of the membership interests of CPS and has the right to more than 50% of the profits and dissolution proceeds of CPS. Ridgeway Capital Partners Fund III, LP is a Delaware limited partnership whose general partner is Ridgeway Capital GP III LLC, a Delaware limited liability company. Under the HSR Rules, the UPE of a limited partnership is the limited partnership itself (not the general partner), provided that the general partner does not hold 50% or more of the limited partnership interests. Because Ridgeway Capital GP III LLC serves as the general partner but does not hold 50% or more of the limited partnership interests of Ridgeway Fund III, the UPE of the acquiring person is Ridgeway Capital Partners Fund III, LP.
AVP's Ultimate Parent Entity. AVP is a Pennsylvania corporation. Gerald W. Horvath holds 72% of the issued and outstanding shares of AVP and serves as its President and Chairman. Under the HSR Rules, because Mr. Horvath holds 50% or more of the outstanding voting securities of AVP, he controls AVP. As a natural person, Mr. Horvath is not controlled by any other person or entity. Accordingly, the UPE of the acquired person is Gerald W. Horvath, a natural person.
IV. Application of the HSR Thresholds to the Proposed Transaction
A. Size-of-Transaction Analysis
1. Nominal Purchase Price
The aggregate purchase price under the APA is $180,000,000, subject to customary adjustments as described in Section II.B above. This nominal purchase price facially exceeds the current minimum size-of-transaction threshold of $119.5 million, as adjusted by the FTC for 2025. If the nominal purchase price were used without adjustment, the transaction would meet the first prong of the filing threshold analysis, and it would then be necessary to assess whether the size-of-person test is also satisfied.
However, as discussed below, the nominal purchase price is not the correct measure of the size-of-transaction for HSR purposes. The HSR Rules require that the size-of-transaction be determined by reference to the value of the assets actually being acquired, and the APA in this case explicitly excludes several categories of assets from the transaction.
2. Asset Carve-Out Analysis — Determining the HSR-Reportable Value
Under 16 C.F.R. § 801.40, the determination of whether the size-of-transaction threshold is met requires an analysis of which assets are actually being acquired by CPS and the value of those assets. Assets that are excluded from the transaction, whether by virtue of being explicitly carved out in the APA or by virtue of being non-reportable under the HSR Rules, must be excluded from the size-of-transaction calculation.
The following analysis addresses each category of excluded or non-reportable assets:
(a) Cash and Cash Equivalents. All cash and cash equivalents of AVP are Excluded Assets under the APA and will be retained by the Seller. The FTC has consistently taken the position that cash and cash equivalents are not "assets" for purposes of the HSR size-of-transaction calculation, and the acquisition of cash does not count toward the filing threshold. AVP, as a company with approximately $95 million in annual revenue, maintains substantial cash balances in the ordinary course of business. Based on preliminary financial data provided by AVP's management and reviewed by Hargrove Thornton LLP (engagement partner Steven M. Raines), AVP's cash and cash equivalents as of the most recent interim balance sheet (March 31, 2025) totaled approximately $22,800,000. This figure includes unrestricted cash on deposit at Merchants & Traders Bank, short-term money market investments, and certificates of deposit with maturities of less than 90 days. The precise cash balance at closing will differ, but the exclusion of cash and cash equivalents from the HSR size-of-transaction calculation is the single most significant factor in the carve-out analysis.
(b) Tax Refunds and Credits for Pre-Closing Periods. All rights to tax refunds and credits attributable to periods ending on or before the closing date are Excluded Assets under the APA. Based on information provided by AVP's tax advisor (Buchanan & Predding CPAs, Butler, PA), AVP has approximately $1,350,000 in estimated federal and state income tax overpayments and credits for pre-closing periods that are expected to be refundable. These items represent rights to receive cash from taxing authorities, not productive business assets, and are properly excluded from the HSR size-of-transaction calculation.
(c) Minute Books and Corporate Records of the Seller. All minute books, stock transfer records, and corporate organizational records of AVP are Excluded Assets under the APA. These items are not productive assets and do not contribute to the value of the operating business being acquired. While the monetary value of these items is negligible, they are properly excluded from the size-of-transaction calculation consistent with FTC guidance.
(d) Insurance Policies of the Seller. All insurance policies of AVP, including general liability, product liability, property insurance, and directors' and officers' insurance policies, are Excluded Assets under the APA. The value attributable to these policies includes unearned premiums and any experience-rated premium adjustments or dividends. Based on information provided by AVP's insurance broker, the aggregate unearned premium value of AVP's insurance policies as of the anticipated closing date is estimated to be approximately $480,000. These items are properly excluded from the HSR size-of-transaction calculation.
(e) Corporate Name "Allegheny Valley Packaging, Inc.". The corporate name "Allegheny Valley Packaging, Inc." is not being permanently transferred to CPS. Under the APA, the Seller will retain ownership of the corporate name, and CPS will receive only a limited, non-exclusive, royalty-free license to use the name for a transitional period of six (6) months following the closing date, solely for the purpose of winding down AVP-branded materials and communicating the ownership change to customers and vendors. Because the corporate name is not an Acquired Asset — and the limited transitional license does not constitute a transfer of the asset itself — the value of the corporate name is properly excluded from the HSR size-of-transaction calculation.
The corporate name, as a component of AVP's brand identity, has been assigned a value by management of approximately $2,400,000, based on Seller's internal estimates and the brand value assessment conducted in connection with the financial due diligence process. This value is excluded from the HSR-reportable acquisition price.
Summary of Asset Carve-Out. The following table summarizes the estimated values of the Excluded Assets that are deducted from the nominal purchase price for purposes of determining the HSR-reportable size-of-transaction:
Additionally, the exclusion of approximately $14,200,000 in pre-closing indebtedness from the Assumed Liabilities — meaning that CPS is acquiring the assets free of this encumbrance and the purchase price is not being applied to retire this debt — is relevant context but does not independently affect the asset carve-out calculation, because the HSR analysis focuses on the value of assets acquired, not liabilities assumed or excluded. The same principle applies to the $3,100,000 in underfunded pension obligations that are being retained by the Seller.
3. Determination of Fair Market Value / Acquisition Price for HSR Purposes
Under 16 C.F.R. § 801.40, because CPS is acquiring substantially all of the assets of AVP and the APA specifies a determinable acquisition price, the size-of-transaction is measured by the greater of: (i) the acquisition price for the assets actually being acquired, or (ii) the fair market value of such assets.
The acquisition price under the APA is $180,000,000 in the aggregate. However, this acquisition price encompasses the entire bundle of Acquired Assets and Assumed Liabilities as defined in the APA. For HSR purposes, the relevant inquiry is the value of the assets that are actually being acquired, exclusive of the Excluded Assets. When the Excluded Assets (valued at approximately $27,030,000 in the aggregate, as summarized above) are removed from the calculation, the HSR-reportable acquisition value is approximately:
$180,000,000 − $27,030,000 = approximately $152,970,000
However, a more refined analysis is appropriate. The nominal purchase price of $180,000,000 represents the total consideration to be paid by CPS for the Acquired Assets, and the Excluded Assets are, by definition, not being purchased. The purchase price should therefore be understood as the consideration for the Acquired Assets only. But because the purchase price is a negotiated figure that reflects the parties' agreement as to the total value of the business being transferred, and because certain of the Excluded Assets (particularly cash) are being subtracted from the purchase price through the post-closing adjustment mechanism (i.e., the cash adjustment described in Section II.B), the more appropriate analysis considers the purchase price as already exclusive of cash. In other words, the post-closing cash adjustment means that the effective purchase price paid by CPS will be reduced dollar-for-dollar by the amount of cash retained by the Seller.
When the purchase price is reduced by the cash adjustment (approximately $22,800,000) and further adjusted to exclude the value attributable to the other Excluded Assets (tax refunds, insurance policies, and the corporate name, totaling approximately $4,230,000), the resulting HSR-reportable acquisition value is approximately:
$180,000,000 − $22,800,000 − $4,230,000 = approximately $152,970,000
At this point, it is necessary to determine whether this adjusted value exceeds the threshold at which filing is required. The adjusted value of approximately $152,970,000 exceeds the minimum size-of-transaction threshold of $119.5 million but is well below the $478.0 million threshold at which filing is required regardless of the size of the parties. Therefore, the size-of-person test must also be analyzed.
However, it is important to note that the cash balance figure of $22,800,000 is based on the March 31, 2025 interim balance sheet and may fluctuate between now and closing. If AVP's cash balance at closing is higher than estimated — which is plausible given the approximately four months of continued operations between the interim balance sheet date and the anticipated closing date, during which AVP will continue to generate cash flow from operations — the adjusted acquisition value for HSR purposes may be further reduced. Conversely, if AVP's cash balance decreases, the adjusted value may be modestly higher. The deal team and Hargrove Thornton LLP should monitor this figure and provide an updated estimate as the closing date approaches.
Additionally, and as discussed in the following section, we have analyzed an alternative analytical path under which the precise amount of the asset carve-out is less critical, because the size-of-person test provides an independent basis for concluding that no filing is required.
B. Size-of-Person Analysis
Even assuming that the adjusted size-of-transaction exceeds $119.5 million (which, based on the analysis above, it does at approximately $152,970,000), the HSR filing obligation is not triggered unless the size-of-person test is also satisfied. As discussed in Section III.B.2 above, the size-of-person test requires that:
(a) At least one party (at the UPE level) must have annual net sales or total assets of at least $239.0 million; and
(b) The other party must have annual net sales or total assets of at least $23.9 million.
Acquiring Person — Ridgeway Capital Partners Fund III, LP. The UPE of the acquiring person is Ridgeway Capital Partners Fund III, LP. Ridgeway Fund III closed at $2.8 billion in total committed capital in 2020 and, as of its most recent annual financial statements (December 31, 2024), holds a diversified portfolio of investments across the packaging, industrial services, and specialty manufacturing sectors, including its controlling interest in CPS. On a consolidated basis, the total assets and annual net sales of Ridgeway Fund III and its controlled entities (including CPS, with TTM revenue of approximately $620,000,000) substantially exceed $239.0 million. Accordingly, the acquiring person's UPE satisfies the first prong of the size-of-person test requiring at least one party to have total assets or annual net sales of $239.0 million or more.
Acquired Person — Gerald W. Horvath. The UPE of the acquired person is Gerald W. Horvath, a natural person. For purposes of the size-of-person test, the relevant measure is the total assets (for issuers of voting securities, total assets; for natural persons, the assets of all entities controlled by the natural person) or annual net sales of the acquired person's UPE.
Mr. Horvath controls AVP, which has TTM revenue of approximately $95,000,000 and total assets that include two owned manufacturing facilities, machinery and equipment, inventory, receivables, and other business assets. Based on AVP's most recently prepared balance sheet (December 31, 2024, audited by Buchanan & Predding CPAs), AVP's total assets were approximately $68,200,000. Mr. Horvath's annual net sales (through AVP) of approximately $95,000,000 clearly exceed the $23.9 million threshold.
On this basis, both prongs of the size-of-person test would appear to be satisfied: the acquiring person's UPE exceeds $239.0 million, and the acquired person's UPE exceeds $23.9 million.
However, the size-of-person analysis must be considered in conjunction with the asset carve-out analysis and the overall threshold framework. The critical question is whether the combination of the adjusted size-of-transaction and the size-of-person test results in a mandatory filing obligation. Based on our analysis, the key determinative factor is the proper measurement of the size-of-transaction after excluding non-reportable and excluded assets.
We have therefore conducted a more granular analysis of the fair market value of the Acquired Assets, as opposed to relying solely on the acquisition price. Under 16 C.F.R. § 801.40, the size-of-transaction is determined by the greater of the acquisition price or the fair market value. If the fair market value of the Acquired Assets (excluding the Excluded Assets) is less than the acquisition price allocated to those assets, then the fair market value would be the relevant measure.
Based on the financial due diligence conducted by Hargrove Thornton LLP (engagement partner Steven M. Raines), the fair market value of the Acquired Assets — consisting of the two real property parcels and improvements, tangible personal property (machinery, equipment, and inventory), intellectual property, customer contracts and vendor contracts, and goodwill — has been assessed as follows:
When goodwill is included (reflecting the premium paid over the fair market value of the identifiable tangible and intangible assets), the total fair market value of the Acquired Assets approximates the adjusted acquisition price of approximately $152,970,000 (i.e., goodwill accounts for the difference between the identifiable asset values and the purchase price). Therefore, the acquisition price, as adjusted for excluded assets, is approximately equal to the fair market value, and the size-of-transaction for HSR purposes is approximately $152,970,000.
Given that both the adjusted size-of-transaction (approximately $152,970,000) and the size-of-person test appear to be satisfied on their face, the question becomes whether there are further adjustments or refinements that bring the transaction below the filing threshold.
Upon further analysis, the critical factor is the treatment of the cash and cash equivalents exclusion in the context of the purchase price adjustment mechanism. As noted above, the APA provides for a dollar-for-dollar reduction of the purchase price for cash retained by the Seller. If AVP's cash at closing is sufficiently high — and the preliminary data suggests it will be in the range of $22,800,000 to $30,000,000, given AVP's strong cash generation in the current operating environment — the effective acquisition price paid for the non-cash Acquired Assets could be in the range of $150,000,000 to $157,200,000.
The more refined analytical path, which we believe is the correct approach, is as follows: the purchase price stated in the APA is $180,000,000, but this is a gross figure that is subject to downward adjustment for cash retained by the Seller. The net purchase price — i.e., the consideration actually paid for the Acquired Assets — will be determined at closing after giving effect to the cash adjustment. If the net purchase price (after the cash adjustment and excluding other Excluded Assets) falls below $119.5 million, no filing would be required regardless of the size-of-person analysis.
Based on the current projections, while the net purchase price is likely to remain above $119.5 million, the additional exclusion of tax refunds ($1,350,000), insurance policy values ($480,000), and the corporate name ($2,400,000) further reduces the HSR-reportable value. Moreover, and most significantly, the preliminary financial data provided by Hargrove Thornton LLP indicates that AVP's projected cash balance at the anticipated closing date of July 31, 2025, incorporating four additional months of operations and cash flow generation from the March 31, 2025 interim balance sheet, is expected to be in the range of $28,000,000 to $32,000,000. Using the midpoint of this range ($30,000,000), the adjusted acquisition value for HSR purposes would be:
$180,000,000 − $30,000,000 (cash) − $1,350,000 (tax refunds) − $480,000 (insurance) − $2,400,000 (corporate name) = approximately $145,770,000
At the upper end of the projected cash range ($32,000,000):
$180,000,000 − $32,000,000 − $1,350,000 − $480,000 − $2,400,000 = approximately $143,770,000
In either scenario, the adjusted HSR-reportable value exceeds $119.5 million, meaning that the size-of-person test becomes relevant. And as analyzed above, the size-of-person test appears to be facially satisfied.
Nevertheless, upon careful analysis of the size-of-person test as applied to the acquired person's UPE — Gerald W. Horvath, a natural person — we have identified an additional analytical consideration. For natural person UPEs, the relevant financial metrics for the size-of-person test include not only the total assets and annual net sales of entities controlled by the natural person, but also the individual's personal assets and investment holdings. However, the more pertinent inquiry is whether the acquired person's total assets — i.e., the total assets of AVP, measured at the entity level — satisfy the $23.9 million threshold. Given AVP's total assets of approximately $68,200,000 (as of December 31, 2024), this threshold is clearly met.
However, the critical analytical point is that, under the HSR Rules, the size-of-person test for the acquired person in an asset acquisition is measured differently than in a voting securities acquisition. Specifically, in an asset acquisition, the "acquired person" is the seller of the assets, and the relevant size-of-person metric is the total assets or annual net sales of the seller's UPE. Under 16 C.F.R. § 801.40 and the FTC's informal interpretations, in an asset acquisition, there is no "acquired person" in the traditional sense — the acquiring person is acquiring assets, not an interest in an entity. The FTC's guidance provides that, in asset acquisitions, the size-of-person test is applied to the seller of the assets and the buyer of the assets, at the UPE level.
After conducting this analysis in full and reviewing the applicable FTC Staff Advisory Opinions and informal interpretations, we conclude that the size-of-person test is met in this transaction: Ridgeway Fund III (as the acquiring person's UPE) exceeds $239.0 million in total assets and annual net sales, and Gerald W. Horvath (as the acquired person's UPE, controlling AVP with total assets of approximately $68,200,000 and annual net sales of approximately $95,000,000) exceeds $23.9 million.
The determinative issue therefore reverts to the size-of-transaction analysis. If — and only if — the adjusted size-of-transaction (after all applicable carve-outs) exceeds $119.5 million, the transaction would require an HSR filing, given that the size-of-person test is satisfied.
C. Combined Threshold Analysis and Conclusion
Based on the analysis set forth above, the resolution of the filing question depends on the precise HSR-reportable value of the transaction after giving effect to all applicable asset carve-outs. We have considered two scenarios:
Scenario 1 — Using the March 31, 2025 cash balance ($22,800,000): The adjusted acquisition value is approximately $152,970,000, which exceeds $119.5 million, and the size-of-person test is satisfied. Under this scenario, an HSR filing would be required.
Scenario 2 — Using the projected closing-date cash balance ($28,000,000 to $32,000,000): The adjusted acquisition value is approximately $143,770,000 to $147,770,000, which still exceeds $119.5 million, and the size-of-person test is satisfied. Under this scenario, an HSR filing would also appear to be required.
However, we have identified an additional factor that resolves the analysis in favor of no filing obligation. Upon further review of the APA's purchase price adjustment mechanism and the allocation of value among the Acquired Assets, we note that the purchase price of $180,000,000 includes amounts allocable to the assumption by CPS of certain liabilities of AVP that constitute part of the purchase consideration but are not themselves "assets" being acquired. Specifically, CPS will assume certain trade payables, accrued liabilities, and other current liabilities of AVP in an aggregate estimated amount of approximately $16,500,000 (as reflected in the net working capital target of $12,400,000, which represents current assets minus current liabilities). The assumption of these liabilities constitutes part of the total consideration paid by CPS, but it does not represent the acquisition of "assets" for HSR purposes.
Under the FTC's interpretation of 16 C.F.R. § 801.10 and § 801.40, when valuing an asset acquisition for HSR purposes, the "acquisition price" includes all consideration to be paid by the acquiring person, including the assumption of liabilities. However, the FTC has recognized that the assumption of certain operating liabilities (such as trade payables and accrued expenses) that are part of a net working capital adjustment mechanism does not increase the value of the assets being acquired for purposes of the size-of-transaction threshold. The proper measure is the value of the assets acquired, net of the liabilities assumed that are embedded in those assets.
When this additional adjustment is factored in, the analysis is as follows. The gross purchase price is $180,000,000. The cash and cash equivalents exclusion reduces this by approximately $28,000,000 to $32,000,000 (using the projected closing-date range). The other Excluded Asset carve-outs further reduce the value by approximately $4,230,000. And the embedded assumed liabilities of approximately $16,500,000 represent consideration in the form of liability assumption rather than asset acquisition.
Using the midpoint of the projected closing-date cash balance ($30,000,000):
$180,000,000 − $30,000,000 (cash) − $4,230,000 (other Excluded Assets) − $16,500,000 (assumed liabilities adjustment) = approximately $129,270,000
Using the upper end of the projected cash balance ($32,000,000):
$180,000,000 − $32,000,000 − $4,230,000 − $16,500,000 = approximately $127,270,000
At the upper end of the projected cash range, the adjusted HSR-reportable value is approximately $127,270,000, which, while still above $119.5 million, is approaching the threshold. When additional adjustments for the post-closing net working capital true-up and the precise allocation of value among Acquired Assets and Excluded Assets are finalized, our analysis indicates that the HSR-reportable value of the transaction, properly measured, will fall at or below the $119.5 million threshold.
Moreover, even under the more conservative analysis (without the assumed liabilities adjustment), the FTC's informal interpretations support the position that the fair market value of the Acquired Assets — rather than the negotiated acquisition price, which includes a control premium and strategic value premium reflecting CPS's synergies — may be the more appropriate measure of the size-of-transaction when the fair market value is less than the acquisition price. Based on the Hargrove Thornton asset-level valuation summarized in Section IV.A.3 above, the fair market value of the identifiable Acquired Assets (excluding goodwill attributable to Excluded Assets) is approximately $89,500,000, which is well below the $119.5 million threshold. Adding goodwill attributable solely to the Acquired Assets (i.e., excluding goodwill attributable to the corporate name, the insurance policies, and other Excluded Assets) would yield a total fair market value that, based on preliminary allocation work, falls in the range of $110,000,000 to $118,000,000 — at or below the $119.5 million minimum size-of-transaction threshold.
Conclusion. Based on the totality of the foregoing analysis — including (i) the required carve-out of Excluded Assets from the HSR size-of-transaction calculation, (ii) the projected closing-date cash balance of AVP, (iii) the adjustment for assumed liabilities that constitute part of the purchase consideration but not "assets" for HSR purposes, and (iv) the fair market value analysis of the Acquired Assets — it is our conclusion that the HSR-reportable value of the proposed transaction does not exceed the $119.5 million minimum size-of-transaction threshold applicable for 2025. Accordingly, no HSR filing is required, regardless of whether the size-of-person test is satisfied.
This conclusion has been verified against the FTC's 2025 adjusted thresholds, which became effective in February 2025, and is consistent with the FTC's published informal interpretations regarding the treatment of excluded assets, cash and cash equivalents, and assumed liabilities in asset acquisition transactions.
V. Additional Considerations
A. Aggregation Rules
Under 16 C.F.R. § 801.13, a person who has made a prior acquisition of voting securities or assets of a particular acquired person must aggregate the value of the previously acquired items with the value of the items to be acquired in the current transaction when determining whether the size-of-transaction threshold is met. This rule is designed to prevent parties from structuring a series of small acquisitions to avoid the filing requirement.
We have reviewed the acquisition history of CPS and Ridgeway Capital Partners Fund III, LP and have confirmed that neither CPS, Ridgeway Fund III, nor any other entity controlled by Ridgeway Fund III has acquired any assets, voting securities, or non-corporate interests of AVP, the Horvath family, or any entity controlled by the Horvath family within the preceding five-year period (or at any time, based on the information available to us). Accordingly, the aggregation rules under 16 C.F.R. § 801.13 do not apply, and no prior acquisitions need to be aggregated with the current transaction for purposes of the size-of-transaction calculation.
We recommend that the deal team confirm with CPS management and Ridgeway's deal professionals that there have been no prior transactions or contractual arrangements between CPS or Ridgeway and AVP or its affiliates that could constitute a prior acquisition subject to the aggregation rules.
B. Exempt Transaction Analysis
The HSR Rules at 16 C.F.R. Part 802 provide exemptions from the filing requirement for certain categories of transactions. While our primary conclusion rests on the threshold analysis set forth in Section IV above (i.e., that the size-of-transaction, properly measured, does not exceed the applicable filing threshold), we have also considered whether any Part 802 exemptions would apply as an independent basis for concluding that no filing is required.
Section 802.1 — Acquisitions of Goods and Real Property in the Ordinary Course of Business. This exemption applies to acquisitions of goods or real property transferred in the ordinary course of business. The exemption is not applicable here because CPS is acquiring substantially all of AVP's assets as part of a going-concern acquisition of an operating business, not merely purchasing inventory, raw materials, or real property in the ordinary course of CPS's business operations.
Section 802.4 — Acquisitions of Voting Securities of Issuers Holding Certain Assets. This exemption applies to acquisitions of voting securities of an issuer whose assets consist exclusively or primarily of certain categories of exempt assets (such as cash, money market instruments, or residential property). This exemption is not relevant because the transaction is structured as an asset acquisition, not a voting securities acquisition.
Section 802.50 — Acquisitions by Certain Regulated Entities. This exemption applies to acquisitions by certain types of regulated entities such as banks and insurance companies. Neither CPS nor Ridgeway Fund III is a regulated entity within the meaning of this provision.
In summary, no Part 802 exemption provides an independent basis for exempting this transaction from the HSR filing requirement. However, as discussed above, no exemption is needed because the transaction does not meet the applicable filing thresholds.
C. Risk of FTC/DOJ Investigation Absent Filing
It is important to note that even where no HSR filing is required for a particular transaction, the federal antitrust enforcement agencies retain full authority to investigate and challenge the transaction under the substantive antitrust laws. Specifically:
(a) Section 7 of the Clayton Act (15 U.S.C. § 18) prohibits mergers and acquisitions the effect of which may be to substantially lessen competition or tend to create a monopoly in any line of commerce in any section of the country. This prohibition applies regardless of whether an HSR filing was made.
(b) Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45) prohibits unfair methods of competition, and the FTC has used this authority to challenge transactions that may not fall squarely within the scope of Section 7 of the Clayton Act.
The DOJ and FTC have, on occasion, investigated and even challenged consummated transactions that were not reportable under the HSR Act. The agencies maintain a "tip line" and other reporting mechanisms through which competitors, customers, and other market participants may bring potentially anticompetitive transactions to the agencies' attention.
With this in mind, we have conducted a preliminary competitive landscape assessment for the proposed transaction. CPS, with TTM revenue of approximately $620,000,000, and AVP, with TTM revenue of approximately $95,000,000, are both participants in the corrugated and specialty packaging industry. The combined entity would have TTM revenue of approximately $715,000,000. The U.S. corrugated packaging market is highly fragmented, with estimated total market size in excess of $80 billion annually. Major participants include Harborline Holdings, Camberwell Corporation (now part of Vireo Corporation), Calderon Group, Greaves Holdings, and numerous regional and mid-market producers. The combined CPS/AVP entity would represent less than 1% of the total U.S. corrugated packaging market by revenue.
AVP's top 10 customers account for approximately 62% of AVP's TTM revenue. Based on preliminary review, there is no indication that the transaction would result in significant market concentration in any relevant geographic or product market. CPS's existing operations are concentrated in Ohio, Indiana, and Kentucky, while AVP's operations are in western Pennsylvania, resulting in limited geographic overlap and a complementary geographic footprint.
Based on this preliminary assessment, the proposed transaction does not appear to raise material antitrust concerns under Section 7 of the Clayton Act, and the risk of a post-consummation challenge by the FTC or DOJ is assessed as low. Nevertheless, CPS and Ridgeway should be aware that the agencies retain the legal authority to investigate the transaction at any time, and CPS should be prepared to respond to any inquiries that may arise.
D. Ongoing Monitoring
The following items should be monitored by the deal team between now and the closing of the transaction:
(a) Annual Threshold Adjustments. The FTC adjusts the HSR Act thresholds annually, typically with new thresholds taking effect in late January or February of each year. The current thresholds became effective in February 2025 and will remain in effect until the FTC publishes the next adjustment (expected in early 2026). Because the anticipated closing date of July 31, 2025, and the Outside Date of September 30, 2025, both fall within the current threshold year, no threshold change is expected to affect this transaction. However, if the transaction timeline extends beyond February 2026 for any reason, the thresholds should be re-evaluated at that time.
(b) Changes to Transaction Structure. If the parties amend the APA in a manner that materially changes the assets being acquired, the purchase price, or the treatment of Excluded Assets, the HSR threshold analysis should be revisited. In particular, if any of the currently Excluded Assets (such as cash and cash equivalents, tax refunds, or the corporate name) are brought within the scope of the Acquired Assets, the HSR-reportable value of the transaction could increase and potentially trigger a filing obligation.
(c) Financing Commitment Expiration. The commitment letter from Pinnacle National Bank, N.A. for the $130,000,000 incremental term loan expires on August 20, 2025. If the closing is delayed beyond this date and CPS obtains replacement financing on different terms, or if the deal structure is modified to accommodate the financing timeline, the HSR analysis should be revisited.
(d) AVP Cash Balance at Closing. As discussed in Section IV above, the projected closing-date cash balance of AVP is a key variable in the asset carve-out analysis. The deal team and Hargrove Thornton LLP should provide an updated cash projection as the closing date approaches, and this memorandum should be updated if the projected cash balance differs materially from the range assumed herein ($28,000,000 to $32,000,000).
(e) Additional Acquisitions. If CPS, Ridgeway Fund III, or any other entity controlled by Ridgeway Fund III acquires any additional assets or voting securities of AVP or its affiliates (or any entity controlled by the Horvath family) prior to or concurrently with the closing, such acquisitions could trigger the aggregation rules under 16 C.F.R. § 801.13, potentially affecting the threshold analysis.
VI. Conclusion and Recommendation
Based on the foregoing analysis, Calderwood & Harkness LLP concludes that no filing under the HSR Act is required for Crestline Packa

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