Graphic Packaging and International Paper form paper-based packaging giant

Structured as a new partnership, the move combines Graphic Packaging’s existing businesses and International Paper’s North America Consumer Packaging business. Graphic Packaging owns 79.5 percent and is the sole operator. International Paper owns 20.5 percent of the partnership, equivalent to a 1.14 billion USD value. The partnership assumes 660 million USD of International Paper debt. As a result, International Paper’s North America Consumer Packaging business is valued at 1.8 billion USD.

Graphic Packaging is a provider of paper-based packaging for a variety of products to food, beverage and other consumer product companies. The company operates on a global basis, and is one of the largest producers of folding cartons in the US. It also claims market-leading positions in coated unbleached kraft paperboard and coated-recycled paperboard. International Paper's North America Consumer Packaging business is a producer of solid bleached sulfate (SBS) paperboard and paper-based foodservice products globally. The business includes two SBS mills located in Augusta, Georgia and Texarkana, Texas with annual production capacity of 1.2 million tons of SBS, three converting facilities in the US and one in the UK, with the capacity to convert 250,000 tons of SBS paperboard into over 24 billion units of paper-based cups and cylindrical containers.

Graphic Packaging said the partnership expands existing and builds new platforms for integrated growth in SBS foodservice markets and folding carton converting.

Graphic Packaging president and CEO Michael Doss commented: ‘We are excited about the platform for future growth created by this combination. 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.’

Doss described the 75 million USD in synergies as ‘compelling’, which will be driven by cost reductions, increased paperboard integration, and procurement and mill efficiencies.

Mark Sutton, International Paper chairman and CEO, said: ‘After evaluating a range of strategic options, we believe this transaction represents excellent value for our shareholders.

‘Investing in Graphic Packaging gives International Paper 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.’