10.24.17
Graphic Packaging Holding Company will create a $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% of the partnership and will be the sole operator. International Paper will own 20.5% of the partnership, equivalent to a $1.14 billion value. The partnership will assume $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 an 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 $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, GA and Texarkana, TX with annual production capacity of 1.2 million tons of SBS, three converting facilities in the U.S. and one in the UK, 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 $210 million in 2017.
“We are excited about the platform for future growth created by this combination,” said Michael Doss, Graphic Packaging’s president and CEO. “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 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.
Graphic Packaging Holding Company will own 79.5% of the partnership and will be the sole operator. International Paper will own 20.5% of the partnership, equivalent to a $1.14 billion value. The partnership will assume $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 an 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 $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, GA and Texarkana, TX with annual production capacity of 1.2 million tons of SBS, three converting facilities in the U.S. and one in the UK, 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 $210 million in 2017.
“We are excited about the platform for future growth created by this combination,” said Michael Doss, Graphic Packaging’s president and CEO. “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 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.