Packaging Corp to buy rival Boise for $1.27 bn
17 Sep 2013
Packaging Corp of America, a producer of corrugated shipping boxes, yesterday agreed to buy Boise Inc, for about $1.27 billion in cash in order to expand capacity.
Illinois-based Packaging Corp will pay $12.55 per share, a 26 per cent premium to Boise's 13 September closing price. The $1.27 billion deal also includes Boise's debt of $714 million.
Idaho-based Boise manufactures a wide variety of packaging and paper products. Boise's range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products.
Boise's paper products include imaging papers for the office and home, printing and converting papers, and papers used in packaging, such as label and release papers.
The combined companies generated $5.5 billion in sales and $879 million in EBITDA in the last twelve months ended 30 June. The combined packaging business generated 75 per cent of sales, while the remainder was generated by Boise's paper business.
Packaging Corp said that the acquisition will increase its container-board capacity by 42 per cent to 3.7 million tons from 2.6 million tons and corrugated products volume by about 30 per cent.
Packaging Corp expects to generate synergies of approximately $105 million within three years of closing from mill grade optimisation, sales mix and cost reductions, lower transportation costs, corrugated products optimisation, and SG&A cost reductions.
Packaging Corp executive chairman, Paul Stecko said, ''The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies. It provides the containerboard that PCA needs to support our strong corrugated products growth.
Boise chairman, Carl Albert said, ''Our board and management team have thoroughly evaluated a broad range of strategic options for Boise, and we believe this transaction is the best way to maximise value for our shareholders.''
Packaging Corp is the fourth-largest producer of containerboard and corrugated packaging products in the US with sales of $2.8 billion in 2012.
It operates four paper mills and 71 corrugated product plants in 26 states across the country.
