Packaging Corporation of America (PKG) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands production capacity, enhances ability to serve corrugated and sheet feeder customers, and supports profitable growth strategy.

• Facilities are well located to serve high-volume operations and long-term customers.

• Combined organization benefits from complementary product offerings, enhanced customer relationships, and strong cultural fit in safety, innovation, and customer dedication.

Financial terms and conditions

• Cash purchase price is $1.8 billion, representing 8.5x LTM EBITDA, or 6.6x including $60 million in expected synergies.

• The acquired business generated $1.2 billion in sales and $212 million EBITDA in the last twelve months.

• Transaction to be financed with $1.5 billion in new debt and the remainder from cash on hand.

• Pro forma leverage ratio will increase to 1.7x net debt/EBITDA from 0.9x.

• Acquisition expected to be immediately accretive to earnings.

Synergies and expected cost savings

• $60 million in synergy benefits expected, with half realized by end of year one and the rest by year two.

• Synergies include higher integration, operational efficiencies, mill grade optimization, and lower transportation costs.

• Ongoing maintenance capital for acquired business estimated at $40–$50 million per year.