Graphic Packaging To Form Paper-based Packaging Company; IP To Own 20.5%

(RTTNews) - Graphic Packaging Holding Company (GPK) announced it will create a $6 billion paper-based packaging company by forming the new partnership comprised of Graphic Packaging's existing businesses and International Paper's (IP) North America Consumer Packaging business. Graphic Packaging Holding Company will own 79.5 percent of the partnership and will be the sole operator. International Paper will own 20.5 percent of the partnership, equivalent to a $1.14 billion value. The partnership will assume $660 million of International Paper debt.

International Paper's North America Consumer Packaging business is a producer and converter of solid bleached board used in a variety of fiber-based foodservice products. The transaction includes 3,900 Coated Paperboard and Foodservice employees located at 10 locations in the United States and United Kingdom.

International Paper CEO Mark Sutton said: "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."

Graphic Packaging CEO Michael Doss said: "We expect the transaction will significantly increase our mill production and converting scale, meaningfully increase our exposure to the growing foodservice market, provide significant runway to realize synergies, and drive strong financial results. The $75 million in synergies is compelling and will be driven by cost reductions, increased paperboard integration, and procurement and mill efficiencies."