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Fri, Mar 29, 2024 08:26
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Management Side
International Paper to combine unit with Graphic Packaging Holding Co.

MEMPHIS, Tenn. (From news reports) -- International Paper Co. has agreed to combine its North America consumer packaging business with Graphic Packaging Holding Co. in a deal that values the International Paper division at $1.8 billion, the companies said on Tuesday.

Graphic Packaging will own 79.5 percent of the partnership and will be sole operator, and International Paper will own the remainder. The partnership is valued at $6 billion and will assume $660 million of International Paper debt, the companies said.

"After evaluating a range of strategic options, we believe this transaction represents excellent value for IP's shareholders," said International Paper Chairman and CEO Mark Sutton. "Investing in Graphic Packaging gives IP the opportunity to benefit from a much stronger value-creation consumer packaging platform, while allowing us to remain focused on growing value in our core businesses. Our North America Consumer Packaging business has a talented team, very good assets and great customers, and I am confident of the results the combined business will achieve."

International Paper's North America consumer packaging business produces solid bleached sulfate paperboard and paper-based foodservice products. It is projected to generate adjusted earnings before interest, taxes, depreciation and amortization of $210 million in 2017.

The deal is projected to be accretive to earnings in its first year and generate $75 million in synergies by the end of its third year, the companies said. Graphic Packaging said it will not change its board of directors as a result of the partnership.

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