Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
Investing.com - Citi has reiterated its Neutral rating and $197.00 price target on Packaging Corp . of America (NYSE:PKG), a $16.8 billion market cap company with strong financial health according to InvestingPro analysis, following the company’s $1.8 billion acquisition of Greif (NYSE:GEF)’s containerboard assets.
The acquisition includes two mills with 800,000 tons of capacity along with eight sheet feeder and corrugated plants, according to Citi analyst commentary. The transaction is expected to close by the end of the third quarter of 2025. PKG brings strong fundamentals to this deal, with a healthy current ratio of 3.28 and a 23-year track record of consistent dividend payments.
Greif’s containerboard business generated $1.2 billion in revenue and $212 million in EBITDA, implying an 8.5x pre-synergy multiple for the acquisition. Packaging Corp. anticipates achieving $60 million in cost synergies within two years of closing, with 50% realized in the first year.
The expected synergies will be driven by operational and production capabilities, mill efficiencies, increased integration, and lower transportation costs. These improvements would reduce the effective acquisition multiple to 6.6x EBITDA post-synergies.
Packaging Corp. of America is projected to have approximately 1.7x net leverage after completing the transaction. Citi views the acquisition as "logical" and "a modest positive" for Packaging Corp. shares.
In other recent news, Packaging Corporation of America announced a significant acquisition, agreeing to purchase Greif Inc.’s containerboard business for $1.8 billion in cash. This acquisition includes two containerboard mills and eight sheet feeder and corrugated plants in the United States, with the business having generated $1.2 billion in sales and $212 million in EBITDA over the past year. The deal is expected to close by the end of the third quarter, pending regulatory approvals, and is anticipated to be immediately accretive to earnings. In another development, Truist Securities raised its price target for Packaging Corp. of America to $239, maintaining a Buy rating, citing favorable market dynamics in the North American containerboard sector. Conversely, Jefferies downgraded the stock from Buy to Hold, lowering its price target to $205 due to valuation concerns. UBS initiated coverage with a Neutral rating, setting a price target of $200, expressing that market expectations for the company’s EBITDA levels in upcoming years might be overly optimistic. These recent developments highlight the varied analyst perspectives on Packaging Corp. of America’s financial outlook and strategic moves.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.