Greif to acquire Caraustar Industries
Acquisition to significantly enhance margins and free cash flow, strengthening leadership in industrial packaging
Greif, Inc., a global provider of industrial packaging products and services, announced December 20 that it has entered into a definitive agreement to acquire Caraustar Industries, Inc., the leading recycled paperboard and packaging solutions company, from an affiliate of H.I.G. Capital, in a cash transaction valued at $1.8 billion. The transaction is expected to close during the first quarter of calendar year 2019, subject to customary closing conditions, including regulatory clearances.
Caraustar is a market leader in the production of uncoated recycled paperboard (URB) and coated recycled paperboard (CRB), with a variety of applications that include tubes and cores and a diverse mix of specialty products. Based in Austell, Georgia, Caraustar's footprint includes over 80 operating facilities throughout the United States. For the last twelve months ended September 30, 2018 Caraustar generated sales of $1.4 billion and EBITDA of $174 million. Based on trailing twelve month actual volume, adjusted for current market conditions as of September 30, 2018, the run-rate EBITDA is $220 million.
"Caraustar offers an exceptional strategic and cultural fit for Greif," said Greif's President and Chief Executive Officer, Pete Watson. "Its complementary paper packaging and recycled fiber operations will drive significant free cash flow growth, improve balance and profitability within the Greif portfolio and increase Greif's exposure to U.S. industrial and consumer end markets. Most importantly, Greif and Caraustar share the same dedication to providing industry-leading service to all customers. I am excited to welcome our new colleagues to the Greif family and look forward to working closely with them."
"We are excited about today's announcement and what it means for Caraustar's customers and employees," added Caraustar President and Chief Executive Officer, Mike Patton. "Greif is a well-known market leader with a strong manufacturing base. Our customers will benefit from Greif's customer service focus and broad product offering and our employees will join a culture with a strong legacy for service and quality."