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Packaging Corporation of America (NYSE: PKG), Lake Forest, IL, has agreed to acquire packaging and paper business Boise (NYSE: BZ) in Idaho, for $2 billion, including $714 million in debt. The purchase price represents a multiple of 6.7 times adjusted LTM EBITDA of $297 million (excluding special items).
The combined companies generated $5.5 billion in sales in the last twelve months ended June 30. The combined packaging business generated 75 percent of sales over the period, with the remainder generated by Boise’s paper business.
PCA's containerboard capacity will increase 43 percent to 3.7 million tons. PCA’s corrugated products volume will increase by 30 percent, and PCA’s market presence will expand into the Pacific Northwest.
Synergies are estimated to generate pre-tax benefits of about $105 million and are expected to be fully realized within three years of closing. The synergies are projected to come from mill grade optimization, sales mix and cost reductions, lower transportation costs, corrugated products optimization and SG&A cost reductions.
The transaction is expected to close in the fourth quarter.