Graphic Packaging Holding Company, through its primary U.S. operating company, Graphic Packaging International, LLC., has entered into a definitive agreement to acquire the Consumer Packaging Group (CPG) business from Greif, Inc. for approximately $85m. The transaction is expected to close by March 31, 2020, subject to standard closing conditions. Graphic Packaging will acquire seven U.S. converting facilities that manufacture folding cartons for consumer packaged goods businesses. The facilities produce over $200m in annual revenue. The business is expected to generate approximately $20m in annualized EBITDA, including synergies, over the 24-month period after the successful completion of the acquisition.
“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,” said Graphic Packaging President and CEO Mike Doss.
After assessing recently announced market price changes and current expectations for commodity input cost inflation, Graphic Packaging remains committed to its 2020 Adjusted EBITDA and cash flow guidance provided on the fourth quarter and full year 2019 financial results call held January 28, 2020. The company will update 2020 projections to include the Consumer Packaging Group acquisition from Greif after the successful completion of the transaction.
Greif expects to use the proceeds from the sale for debt repayment. The company expects no material impact to its Fiscal 2020 outlook or Fiscal 2022 financial commitments from this divestiture and reaffirms its expectation of at least $70 million in synergies over 36 months from the closing of the Caraustar acquisition.
“We are pleased with the conclusion of the CPG strategic review process,” said Pete Watson, Greif President and Chief Executive Officer. “The sale of CPG allows us to deliver our balance sheet and optimize capital allocation plans. 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.”
Goldman Sachs & Co. LLC served as exclusive financial advisor to Greif for this transaction. Allen & Overy LLP served as Greif’s exclusive legal advisor.