Packaging Corporation of America Announces Agreement to Acquire TimBar Corporation
July 06 2016 - 9:00AM
Business Wire
Packaging Corporation of America (NYSE: PKG) today announced
that it has entered into a definitive agreement to acquire
substantially all of the assets of TimBar Corporation, a large
independent corrugated products producer, in a cash-free, debt-free
transaction for a cash purchase price of $386 million. Under the
terms of the agreement, PCA will acquire five corrugated products
plants, two fulfillment centers and four design centers located
primarily in the eastern and southeastern U.S. The transaction is
structured as a purchase of assets resulting in a full step-up of
the assets to fair market value. TimBar, with sales of $324 million
in 2015, provides solutions to customers in the higher margin
retail, industrial packaging and display and fulfillment markets
with a focus on multi-color graphics and technical innovation.
As a result of the acquisition, PCA's containerboard integration
level is expected to increase by over 200,000 tons or 6% from its
current level of 87% and will allow for further optimization and
enhancement of mill capacity. The value of the increased
containerboard integration, the expected synergies and the tax
benefit of the step-up of assets, plus TimBar’s LTM EBITDA, results
in a purchase price multiple of approximately 4.3 times EBITDA. The
acquisition will be accretive to earnings immediately.
PCA Chairman and CEO Mark Kowlzan said, “Following our
successful integration of Boise, including the capacity we now have
at the DeRidder, LA mill, this acquisition is an excellent fit,
both geographically and strategically, with substantial benefits
and synergies. TimBar is a well-capitalized company with a
commitment to continuous improvement, innovation and safety in
their operations. This, along with their customer focus, has
allowed them to achieve excellent operating margins and consistent
results. We look forward to working together to further enhance our
strong balance sheet, financial results and cash flow consistent
with our strategy to return significant value to our
shareholders.”
Tom Hassfurther, Executive Vice-President Corrugated Products,
added, “The highly-skilled employees, culture and customer base of
TimBar complements PCA extremely well and allows us to apply our
operating and sales expertise across a larger system providing
significant growth potential. This enables us to optimize our focus
on customized solutions for our customers and makes us less reliant
on the export market while maintaining strategic relationships with
our key export customers.”
Closing is subject to certain customary conditions and
regulatory approval and is expected in the third quarter of 2016.
The company expects to finance the transaction with a new term
loan.
PCA is the fourth largest producer of containerboard and
corrugated packaging products in the United States and the third
largest producer of uncoated freesheet paper in North America. PCA
operates eight mills and 90 corrugated products plants and related
facilities.
Some of the statements in this press release are forward-looking
statements. Forward-looking statements include statements about
expected synergies or other benefits from the acquisition, the
timing of completion of the acquisition, our future earnings and
financial condition, our industry and our business strategy.
Statements that contain words such as “ will”, “should”,
“anticipate”, “believe”, “expect”, “intend”, “estimate”, “hope” or
similar expressions, are forward-looking statements. These
forward-looking statements are based on the current expectations of
PCA. Because forward-looking statements involve inherent risks and
uncertainties, the plans, actions and actual results of PCA could
differ materially. Among the factors that could cause plans,
actions and results to differ materially from PCA’s current
expectations include the following: the impact of general economic
conditions; conditions in the paper and packaging industries,
including competition, product demand and product pricing;
fluctuations in costs; the possibility of unplanned outages or
interruptions at our principal facilities; and legislative or
regulatory requirements, particularly concerning environmental and
tax matters, as well as those identified under Item 1A. Risk
Factors in PCA’s Annual Report on Form 10-K for the year ended
December 31, 2015 filed with the Securities and Exchange Commission
and available at the SEC’s website at “www.sec.gov”.
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version on businesswire.com: http://www.businesswire.com/news/home/20160706005290/en/
Packaging Corporation of AmericaBarbara SessionsINVESTOR
RELATIONS: (877) 454-2509PCA’s Website: www.packagingcorp.com
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