Graphic Packaging and Altivity Merge
MARIETTA, Ga., and CHICAGO—Graphic Packaging Corporation and the owners of Altivity Packaging, LLC announced that they have signed a definitive agreement to combine the two companies. The new company will be called Graphic Packaging Holding Company and will trade under the NYSE ticker symbol “GPK”.
The new company has significantly expanded product offerings, market reach, and technology capabilities and expects to have 47 folding carton facilities, 12 multi-wall & specialty bag facilities, 10 paperboard mills, 6 flexible packaging facilities, 5 ink manufacturing facilities, 3 label facilities and 3 packaging machinery manufacturing facilities worldwide. The combined management team has a strong track record of achieving performance improvement objectives and of successfully integrating businesses.
The management teams of Graphic Packaging and Altivity Packaging have identified potential annual gross merger synergies of over $90 million from the combination of Altivity Packaging and Graphic Packaging, which are expected to be fully realized by 2011, with approximately 2/3rds realized by 2009.
Altivity Packaging management expects to achieve 2007 EBITDA in excess of $200 million excluding one-time costs to achieve cost savings and other one-time expenses. In addition to the $90 million of merger synergies resulting from the Graphic Packaging and Altivity Packaging combination, Altivity Packaging management forecasts stand-alone cost reductions of approximately $50 million in 2007 and an additional $45 million in annual cost savings to be fully achieved by 2009.
The transaction is expected to be accretive to Graphic Packaging’s earnings per share and free cash flow (defined as cash provided by operating activities less capital spending) by 2008, prior to one-time costs of achieving synergies.
The transaction is expected to be completed in the fourth quarter of 2007, subject to customary shareholder and regulatory approvals. The transaction has been approved by the Boards of Directors of both companies. Affiliates of TPG Capital, who control and own the majority of Altivity Packaging, have agreed to the transaction, and Graphic Packaging’s three largest shareholders, who on a combined basis control more than 60 percent of Graphic Packaging’s outstanding common stock, have agreed to vote in favor of the merger.