Canadian Packaging

Graphic Packaging combines with NA consumer packaging division of International Paper

Combined companies create a US $6 billion integrated paper-based packaging company.

October 25, 2017   by Canadian Packaging staff

Graphic Packaging Holding Company will create a US $6 billion paper-based packaging company by forming a new partnership comprised of Graphic Packaging’s existing businesses and International Paper‘s North America consumer packaging business.

Graphic Packaging Holding Company will own 79.5 percent of the partnership and will be the sole operator. International Paper will own 20.5 percent of the partnership, equivalent to a US$1.14 billion value. The partnership will assume US$660 million of International Paper debt. There will be no change to Graphic Packaging’s current Board of Directors or leadership team.

The transaction will be completed at a compelling EV/Adjusted EBITDA multiple of 8.6x, pre-synergies, and 6.3x, post-synergies. International Paper will have a two-year lock-up on the monetization of their partnership interest and cannot purchase GPK shares for a period of five years, subject to limited exceptions.

International Paper’s North America Consumer Packaging business is a US$1.6 billion revenue leading producer of solid bleached sulfate (SBS) paperboard and paper-based foodservice products globally. The business includes two SBS mills located in Augusta, Georgia and Texarkana, Texas with annual production capacity of 1.2 million tons of SBS, three converting facilities in the U.S. and one in the U.K., with the capacity to convert 250,000 tons of SBS paperboard into over 24 billion units of paper-based cups and cylindrical containers. The business is projected to generate Adjusted EBITDA of US$210 million in 2017.

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“We are excited about the platform for future growth created by this combination,” says Graphic Packaging president and chief executive officer Michael Doss. “We expect the transaction will significantly increase our mill production and converting scale, meaningfully increase our exposure to the growing foodservice market, provide significant runway to realize synergies, and drive strong financial results.

“The US$75 million in synergies is compelling and will be driven by cost reductions, increased paperboard integration, and procurement and mill efficiencies.”

The transaction has been approved by the Board of Directors of both companies. The transaction is subject to standard closing requirements and regulatory review and is expected to close in early 2018.

About Graphic Packaging Holding Company
Graphic Packaging Holding Company, headquartered in Atlanta, Georgia, is committed to providing consumer packaging that makes a world of difference. The company is a leading provider of paper-based packaging solutions for a wide variety of products to food, beverage and other consumer product companies. The company operates on a global basis, is one of the largest producers of folding cartons in the U.S., and holds leading market positions in coated unbleached kraft paperboard and coated-recycled paperboard. The company’s customers include many of the world’s most widely recognized companies and brands. Additional information about Graphic Packaging, its business and its products is available at www.graphicpkg.com.

Image purchased via www.fotolia.com.


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