October 28, 2017 By P&PC Staff
Oct. 28, 2017 – 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.
The transaction is subject to standard closing requirements and regulatory review and is expected to close early 2018.
Graphic Packaging Holding Company will own 79.5 per cent of the partnership and will be the sole operator, while, International Paper will own 20.5 per cent of the partnership. The partnership will assume US$660 million of International Paper debt.
Company officials say there will be no change to Graphic Packaging’s current board of directors or leadership team.
International Paper will have a two-year lock-up on the monetization of its 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 producer of solid bleached sulfate (SBS) paperboard and paper-based foodservice products globally. The business includes two SBS mills in Georgia and 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 tonnes of SBS paperboard into more than 24 billion units of paper-based cups and cylindrical containers.
“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 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.”
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