The partnership includes a mill in Augusta, Georgia, part of which is seen here.
Graphic Packaging will create a $6 billion paper-based packaging company through a merger with International Paper’s North American consumer packaging business.
The two companies are targeting synergies of $75 million by the end of the third year after completion. The deal builds on both companies’ existing presence in paper- and board-based packaging for the foodservice sector.
Graphic Packaging will own 79.5% of the partnership and will be the sole operator, while International Paper will own a 20.5% stake equivalent to $1.14 billion.
“We are excited about the platform for future growth created by this combination,” said Graphic Packaging president and CEO 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 realise synergies, and drive strong financial results.
“The $75 million in synergies is compelling and will be driven by cost reductions, increased paperboard integration, and procurement and mill efficiencies.”
International Paper’s North American consumer packaging business is valued at $1.8 billion and has annual revenue of $1.6 billion, Graphic Packaging.
It is a leading producer of solid bleached sulfate (SBS) paperboard and paper-based foodservice products. The business includes two SBS mills located in Augusta, Georgia and Texarkana, Texas – with annual production capacity of 1.2 million tons of SBS – as well as three converting facilities in the US and one in the UK.
It has the capacity to convert 250,000 tons of SBS paperboard into over 24 billion units of paper-based cups and cylindrical containers. It is projected to generate adjusted EBITDA of $210 million in 2017 but brings with it $660 million’s worth of debt, which will be assumed by the new partnership.
© FoodBev Media Ltd 2019