Greif is divesting its containerboard business – including containerboard mills, sheet feeders, and corrugated plants – in a $1.8 billion all-cash transaction to Packaging Corporation of America.
Consisting of two containerboard mills and eight sheet feeders (including its CorrChoice sheet feeder network) and corrugated plants across the United States, the Greif containerboard business is said to offer 800,000 tons of production capacity.
It reportedly generated around $1.2 billion (€1,022,616,000) in sales and $212 million (€180,686,181.30) of earnings before interest, taxes, depreciation, and amortization (EBITDA) for the twelve months ending on 30th April 2025.
By divesting the business, Greif expects to position itself as a packaging leader and deliver more durable earnings. The company seeks to enhance its capital utilization and reduce recurring capital needs, as well as enable debt reduction and unlock opportunities for value creation.
Meanwhile, Packaging Corporation of America is described as the third-largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. It operates eight mills and 86 corrugated production plants and related facilities.
Cash proceeds are set to be allocated to debt repayment; this is expected to result in a pro-forma leverage ratio below 2.0x after the closing, with a further plan to divest Greif’s timberland business hoped to drive a further reduction. Both undertakings are hoped to facilitate future disciplined capital redeployment and optionality for strategic growth investments.
The transaction is scheduled to close by the end of Greif’s fiscal year 2025, subject to customary closing conditions, including regulatory approvals. Within two years after closing, synergies are expected to be fully realized, estimated to generate pre-tax benefits of around $60 million (€51,160,800).
These synergies are linked to improved capabilities, both production-related and operational, and efficiencies at the mills, alongside increased integration, mill grade optimization, and reduced transportation costs. By the end of the first year, around half of the benefits are expected to be achieved; the other half are set to be received by the end of the second year.
Combined with the purchase price, this reportedly represents a multiple of 6.6X LTM EBITDA – the purchase price alone represents a multiple of 8.5X LTM EBITDA, according to Packaging Corporation of America. It adds that the acquisition is expected to be accreditive to earnings immediately.
Packaging Corporation of America expects to finance the transaction with $1.5 billion of new debt and cash on hand. Its pro forma leverage ratio (net debt to EBITDA) is approximated at 1.7X after the transaction is complete.
“The sale of our Containerboard business is fully aligned with our Build to Last strategy and unlocks immediate value for our shareholders,” said Ole Rosgaard, president and CEO of Greif. “It represents a pivotal step in our work to sharpen our portfolio, enhance our capital efficiency, and advance our growth priorities.
“Once finalized, our remaining material solutions all contain leadership positions to drive margin expansion and cash flow generation.”
“This acquisition furthers PCA’s profitable growth strategy,” continued Mark Kowlzan, CEO of Packaging Corporation of America. “The mills nicely complement PCA’s system and will provide containerboard to support PCA’s continued corrugated products growth.
“We expect to achieve significant synergies with minimal capital investment through our operational expertise and will identify even more opportunities within the combined system for future high-return investments to grow with our corrugated and sheet feeder customers. We will continue to generate significant cash flows and value for our shareholders.”
President Tom Hassfurther added: “We have a great deal of respect for Greif and are very pleased to have reached agreement to acquire this business. Greif’s people have developed deep and lasting relationships with their customers, who we look forward to serving with Greif’s well capitalized facilities.
“It is a very strong cultural fit with us in terms of safety, innovation, growth and dedication to serving the needs of customers. We will apply the sales, customer service and operational expertise of the combined organization to even better serve our corrugated and sheet feeder customers and achieve additional growth and profitability.”
Other business acquisitions include Toppan Holdings’ $1.8 billion (€1,727,802,000) cash-free and debt-free payment for Sonoco’s Thermoformed & Flexible Packaging business. With this move, Toppan intends to expand its sustainable packaging business into the Americas.
More recently, Suzano and Kimberly-Clark announced that they would acquire respective stakes of 51% and 49% in a new, $3.4 billion entity focused on manufacturing, marketing and distributing tissue products such as toilet paper, napkins, paper towels and facial tissues in over 70 countries. Suzano will pay Kimberly-Clark $1.734 billion in cash for its stake at the closing of the transaction, subject to certain customary post-closing purchase price adjustments.
Mondi also completed its acquisition of Schumacher Packaging’s Western European assets earlier with year, with CEO Corrugated Packaging Markus Gärtner walking us through its progress so far in a recent edition of our ‘In Conversation With…’ series.
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