Graphic Packaging will create a $6bn paper-based packaging firm by combining with International Paper’s (IP) North American consumer packaging business.
IP has agreed to contribute its business for around $1.8bn, of which $660m will be used to clear the existing debt.
As per terms of the deal, Graphic Packaging will hold 79.5% stake in the newly formed unit, while IP will own the remaining 20.5% interest that is valued at $1.14bn.
IP’s North America consumer packaging business is a $1.6bn revenue generated business, which produces solid bleached sulfate (SBS) paperboard and paper-based foodservice products.
The products can be used in different applications, including hot and cold cups, cartons, paper plates, food containers and liquid packaging.
The acquired business operates two SBS mills in Augusta of Georgia and Texarkana of Texas, as well as three converting facilities in the US and one in the UK.
Subject to the receipt of regulatory approval and certain other closing conditions, the deal is expected to complete in early 2018.
IP chairman and 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.”
Graphic Packaging president and 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.”
