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LAKE FOREST, Ill. - Packaging Corporation of America (NYSE:PKG), a $16.8 billion market cap company with strong financial health according to InvestingPro metrics, announced Tuesday it has reached a definitive agreement to purchase Greif, Inc.’s containerboard business for $1.8 billion in cash. The transaction is expected to close by the end of PCA’s third quarter, pending regulatory approvals.
The acquisition includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants across the United States. The Greif containerboard business generated approximately $1.2 billion in sales and $212 million in EBITDA for the 12 months ended April 30, 2025. This addition would complement PCA’s existing operations, which currently generate $8.5 billion in annual revenue and $1.77 billion in EBITDA.
PCA estimates the deal will generate pre-tax synergies of approximately $60 million within two years after closing. These synergies are expected to come from improved operational capabilities, increased integration, mill grade optimization and lower transportation costs. With a healthy current ratio of 3.28 and strong cash flows that adequately cover interest payments, PCA appears well-positioned to integrate this acquisition. For detailed financial analysis and more insights, check out the comprehensive Pro Research Report available on InvestingPro.
The purchase price represents a multiple of 8.5 times LTM EBITDA, or 6.6 times when including projected synergies. PCA plans to finance the transaction with $1.5 billion of new debt and cash on hand, resulting in a pro forma leverage ratio of approximately 1.7 times after completion. The company’s strong financial position is further evidenced by its 23-year track record of consistent dividend payments.
"This acquisition furthers PCA’s profitable growth strategy. The mills nicely complement PCA’s system and will provide containerboard to support PCA’s continued corrugated products growth," said Mark Kowlzan, PCA CEO, in the press release statement.
PCA, the third largest producer of containerboard products in North America, currently operates eight mills and 86 corrugated products plants. BofA Securities provided financial advice and committed financing for the transaction.
The acquisition is expected to be accretive to earnings immediately, according to the company’s statement.
In other recent news, Packaging Corporation of America (PCA) has been the focus of several analyst reports and ratings changes. Truist Securities raised its price target for PCA to $239, maintaining a Buy rating, citing a potential positive shift in the North American containerboard market. Conversely, Jefferies downgraded PCA from Buy to Hold, lowering the price target to $205 due to valuation concerns. UBS initiated coverage with a Neutral rating, expressing skepticism about market expectations for PCA’s EBITDA levels in 2025 and 2026. Moody’s upgraded PCA’s senior unsecured ratings from Baa2 to Baa1, reflecting the company’s strong financial policy and market position. Despite these positive aspects, Citi analysts reported sluggish demand for box stocks, with some sectors experiencing weak performance. PCA’s financial stability is highlighted by its strong liquidity, with $753 million in cash as of March 2025. The company continues to navigate the market dynamics while maintaining its operational and financial strategies.
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