USA – Greif, and industrial packaging products and services company, has entered into a definitive agreement to sell its consumer packaging group (CPG) business for US$85 million in cash to Graphic Packaging Holding Company.

Greif’s CPG business consists of seven converting facilities that manufacture folding cartons for consumer-packaged goods businesses.

Pete Watson, Greif’s President and Chief Executive Officer said that the divesture will allow the company to refocus its business and optimize capital allocations.

“We are pleased with the conclusion of the CPG strategic review process. The sale of CPG allows us to de-lever our balance sheet and optimize capital allocation plans,” Watson said.

“By divesting these assets, we can refocus our business on our core industrial franchise and our stated strategic growth priorities in Intermediate Bulk Container production and reconditioning and containerboard integration.”

President and CEO Mike Doss added, “We are excited to announce the acquisition of the Consumer Packaging Group business from Greif, Inc.

“The transaction further diversifies our end-markets and enhances our service capabilities to growing mid-sized consumer goods and food service customers.

“The continued strategic investments we are making in our integrated mill and converting platform reflect our commitment to existing and new customers to provide the industry’s most efficient production of the highest quality paperboard into sustainable packaging solutions.”

Subject to the satisfaction of customary closing conditions, the companies expect to complete the transaction by March 31st, 2020.

Greif said that it does not expect material impact to its Fiscal 2020 outlook or Fiscal 2022 financial commitments from this divestiture and reaffirms its expectation of at least US$70 million synergies over 36 months from the closing of the Caraustar acquisition.

Upon closing of the transaction, Graphic Packaging expects the business to generate approximately US$20 million in annualized EBITDA, including synergies, over the 24-month period.

In January, Graphic Packaging also unveiled that it had secured two separate deals with US packaging companies to acquire part of their interests in a combined transaction valued at US$290m.

The deals included acquisition of 3.3% stake in Graphic Packaging International Partners for US$250 million and a folding carton facility from Quad/Graphics for US$40 million.

The company has further invested US$22.06 million in expanding its Sneek manufacturing in the Netherlands to meet increased demand for sustainable packaging.