USA – Graphic Packaging Holding has secured two separate deals with US packaging companies to acquire part of their interests in a combined transaction valued at US$290m.
The Atlanta -based provider of packaging solutions to food and beverage industry has entered into an agreement with International Paper to acquire 15.1 million units in their partnership business, Graphic Packaging International Partners.
Under the deal, Graphic Packaging will pay International Papers US$250 million for a 3.3% stake in Graphic Packaging International Partners. The company said that the purchase will be funded with a draw on its domestic revolving credit facility.
The transaction will reduce International Papers’ minority ownership in the partnership business from approximately 21.6% to 18.3%.
International Paper has the contractual right to continue to reduce its minority ownership interest in the Partnership every 180 days with the next potential transaction date in July 2020, subject to modification by the parties.
In a separate transaction, Graphic Packaging has alsoreached an agreement to acquire a folding carton facility from Quad/Graphics, Inc. for US$40.0 million.
The approximately 400,000 square foot converting facility is located in Omaha, Nebraska, close to many existing food, beverage and industrial customers.
A statement from Graphic Packaging reveals that the business generates approximately US$75 million in revenue, consumes roughly 40,000 tons of paperboard.
The company expects to generate approximately US$7 million in annualized EBITDA including synergies over the next 24 months. The transaction is expected to close on or about January 31, 2020.
“The Omaha plant’s focus on high-volume, low-cost converting for folding cartons is a great fit with a vertically integrated supplier like Graphic Packaging, which operates both paperboard mills and converting facilities,” said Joel Quadracci, Chairman, President & CEO of Quad.
“We have a very talented, customer-focused team in Omaha, backed by excellent manufacturing capabilities, and we wish them well as part of the Graphic Packaging network.”
The investments will add to the company’s recently completed acquisition of Artistic Carton Company for US$53 million and the full integration of the SBS mill and foodservice assets.
Graphic Packaging is also investing another US$600 million in a new coated recycled paperboard (CRB) machine in the Midwest with annual capacity of approximately 500,000 tons, to enable the firm meet the increasing demand for sustainable packaging solutions.
The investments are further expected to propel the company beyond the US$6.16 billion net sales mark and an net income of US$206.8 million it achieved in the 2019 financial year.
In a statement accompanying the company’s financial, Michael Doss, the company’s President and CEO said that Graphic Packaging is well-positioned to achieve another year of improved profitability and growth.
“In 2019, we continued to build on our paperboard packaging leadership position by investing in our operations and in our people, successfully executing strategic M&A, capturing performance gains and setting the stage for net organic volume growth.
“We are very pleased with our performance and execution in 2019, as well as the positive momentum we have entered with in 2020,” Michael said.