Packaging Corp Of America to Acquire Boise for $1.995B (PKG,BZ)

Containerboard producer Packaging Corp Of America (PKG) announced on Monday that it has agreed to purchase all outstanding shares of Boise Inc. (BZ) for $1.995 billion.

PKG will acquire the outstanding shares of the packaging and paper product company for $12.55 per share, totalling $1.995 billion. This amount includes $714 million of outstanding indebtedness of BZ.

Together the two companies have brought in $5.5 billion in sales and $879 million in EBITDA over the last year. PKG’s containerboard capacity is expected to grow from $2.6 million tons to $3.7 million tons with the purchase of BZ.

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PKG’s Executive Chairman Paul Stecko commented: "The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies. It provides the containerboard that PCA needs to support our strong corrugated products growth. The DeRidder containerboard mill is low cost, located in a very good wood basket and, after the D2 machine conversion, provides almost one million tons of primarily lightweight containerboard. The combined company is expected to generate strong financial results and strong cash flow which will be used to pay down debt as well as to continue to return value to our shareholders."

Packaging Corp Of America shares were up $5.96, or 10.93%, during pre-market trading Monday. The stock is up 42% YTD.

Boise shares were up $2.66, or 26.71% during premarket trading Monday. The stock is up 25% YTD.