Graphic Packaging signed a definitive agreement with CVC Capital Partners Fund to acquire AR Packaging for approximately $1.45 billion in cash.
WHO: AR Packaging is one of Europe's second-largest producers of fiber-based consumer packaging. The group offers a unique range of packaging solutions from its specialized plants. Added value is created to its customers through its broad product offering and deep knowledge of carton-based and flexible packaging.
Graphic Packaging Holding Company, headquartered in Atlanta, Georgia, is a leading vertically integrated provider of sustainable fiber-based packaging solutions for a wide variety of products to food, beverage, foodservice, and other consumer products companies. The company operates globally, is one of the largest producers of folding cartons and paper-based foodservice products in the United States, and holds strong market positions in coated recycled paperboard, coated unbleached Kraft, and solid bleached sulfate paperboard.
Founded in 1981, CVC is a leading private equity and investment advisory firm with a network of 23 offices throughout Europe, Asia, and the US, with approximately $118 billion of assets under management.
WHY: The combination enhances Graphic Packaging's global scale, innovation capabilities, and value proposition for customers throughout Europe and bordering regions. With a broad set of industry-leading packaging solutions, design expertise, and expanded geographic reach, the combined company will be uniquely positioned to capture continued organic growth opportunities across existing and new global customers and markets.
IN THEIR OWN WORDS: Michael Doss, Graphic Packaging's President and CEO, said, "AR Packaging is a leader in the attractive and growing market for sustainable packaging in Europe. Acquiring AR Packaging will result in significant value creation opportunities for our customers, our employees, and our stockholders as we bring together two leading providers of fiber-based consumer packaging solutions with long histories of innovation and creative packaging design. The large, distributed footprint of AR Packaging's 25 converting facilities across Eastern and Western Europe provides significant scale and cost efficiency benefits strengthening our combined presence and ability to service customers throughout Europe and globally. We are pleased to welcome the AR Packaging team as we work together to further advance our commitment to sustainable packaging solutions for global consumers in support of the move to a more circular economy."
Stephen Scherger, Graphic Packaging's EVP and CFO added, "The acquisition of AR Packaging expands our opportunities to serve and grow in markets around the world with our sustainable packaging solutions. The combination, together with our previously announced acquisition of Americraft Carton, supports our growth goals and positions Graphic Packaging to consistently deliver organic sales growth at the high end of our 100 to 200 basis points goal as outlined in Vision 2025. Notably, the lean operating models executed by both organizations, coupled with our complementary market segments, provide compelling financial benefits. The significant cash flow generation capability of the combination will drive strong returns and is expected to return Graphic Packaging to our long-term 2.5-3.0x target leverage range within 24 months following close."
AR Packaging's President and CEO, Harald Schulz, said, "I am proud of the progress we have made in establishing a clear strategy and building AR Packaging into a respected provider of packaging solutions. I want to thank CVC for their support in those efforts over the last five years. Graphic Packaging's shared approach to customer service and deep focus on providing innovative, sustainable solutions closely aligns with how we operate our own business, making them an ideal partner. The ability to leverage beneficial value chain integration, from paperboard manufacturing to carton converting, provides increased possibilities to offer sustainably optimized solutions to our customers. Our team looks forward to joining with the Graphic Packaging team to become the premier global provider of sustainable fiber-based packaging solutions."
Lave Beck-Friis, Managing Director at CVC, commented, "We are very proud of the progress AR Packaging has made during our partnership. It has been a pleasure working with Harald and his excellent team to develop and roll out numerous new products, as well as investing to support an active M&A agenda to accelerate the growth of the business into a truly global player. We are pleased to be handing AR Packaging over in such a strong position, and to have found a new owner that shares management's vision for the future direction of the business."
- Graphic Packaging to buy AR Packaging for approximately $1.45 billion in cash from CVC Capital Partners Fund.
- The proposed acquisition of AR Packaging is expected to add $1.1 billion in annual sales and $160 million in annual adjusted EBITDA. In addition, the combination is expected to drive total synergies of $40 million over 36 months following close and be immediately accretive to the company's earnings per share and cash flow.
- AR Packaging has approximately $1.1 billion net sales, 5,000 employees, and 30 factories in 13 countries.
- BofA Securities is serving as financial advisor and DLA Piper is serving as legal counsel to Graphic Packaging. Credit Suisse International is serving as financial advisor and Roschier is serving as legal counsel to AR Packaging.
- CVC bought AR in 2016 from Ahlstrom Capital and Accent Equity for an undisclosed amount. At the time, net sales at the company were about 560 million euros.
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