Packaging Corp. to acquire Greif containerboard business for $1.8B in cash

Packaging Corporation of America (PKG) announced that it has entered into a definitive agreement to purchase the containerboard business of Greif (GEF) for $1.8B in cash. The transaction is expected to close by the end of PCA’s third quarter, subject to certain customary conditions and regulatory approvals. The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. The business generated approximately $1.2B in sales and $212M of EBITDA for the 12 months ended April 30, 2025. Synergies are estimated to generate pre-tax benefits of approximately $60M and are expected to be fully realized within two years after closing. The synergies are projected to come from improved operational and production capabilities and efficiencies at the mills, increased integration, mill grade optimization and lower transportation costs. Approximately one half of the benefits are expected by the end of the first year with the remainder being received by the end of the second year. The purchase price represents a multiple of 8.5X LTM EBITDA and, with $60M in benefits from synergies, the purchase price represents a multiple of 6.6X LTM EBITDA. The acquisition is expected to be accretive to earnings immediately. PCA is expected to finance the transaction with $1.5B of new debt and cash on hand. PCA’s pro forma leverage ratio will be approximately 1.7X after completion of the transaction.