What is PCA acquiring and for how much?

PCA agreed to acquire the containerboard business of Greif, Inc. for $1.8 billion in cash, including two containerboard mills and eight sheet feeder and corrugated plants in the United States.

When is the acquisition expected to close?

The company expects the transaction to close by the end of its third quarter of 2025, subject to customary conditions and regulatory approvals, including HSR Act review.

How will the acquisition be financed and how will leverage change?

PCA expects to fund the deal with $1.5 billion of new debt ($1.0 billion in bank term loans and $500 million in notes) and cash on hand. Pro forma net debt to EBITDA leverage is expected to be 1.7X, compared with 0.9X currently.

What synergies and earnings impact does management expect?

Management expects approximately $60 million of pre-tax synergies, about half realized by the end of the first year and the remainder by the end of the second year. The acquisition is expected to be accretive to earnings immediately.

What are the key financial costs of the deal?

The company estimates incremental net interest expense of approximately $100 million per year and ongoing maintenance capital for the acquired business of $40 to $50 million per year.

PKG 8-K: Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 1, 2025. Cited figures are marked; the original filing is the authoritative source.

Packaging Corporation of America (PCA, NYSE: PKG) announced on July 1, 2025 that it has entered into a definitive agreement to acquire the containerboard business of Greif, Inc. for $1.8 billion^a in cash.

The filing states the transaction is expected to close by the end of PCA's third quarter, subject to customary conditions and regulatory approvals, including HSR Act review. The acquired business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants across the United States, generating approximately $1.2 billion^b in sales and $212 million of EBITDA for the 12 months ended April 30, 2025. Management cites a purchase price of 8.5X LTM EBITDA, or 6.6X including $60 million of expected pre-tax synergies, which are projected to be fully realized within two years after closing.

PCA expects the acquisition to be accretive to earnings immediately. The company plans to fund the deal with $1.5 billion^c of new debt ($1.0 billion under new bank term loans and $500 million of notes) and cash on hand, with approximately $20 million of purchase price and transaction expenses funded from cash. Pro forma net debt to EBITDA leverage is expected to be 1.7X, compared with 0.9X currently, and the filing estimates incremental net interest expense of about $100 million per year.

The transaction is presented as a strategic expansion of PCA's corrugated products business, providing containerboard integration into its existing system. The slide presentation also notes a full step-up in asset tax basis and ongoing maintenance capital of $40 to $50 million^d per year for the acquired business. Investors should weigh the synergy and accretion claims against the significant increase in leverage and interest expense.

02—Key points

Key Highlights

Agreement to acquire Greif's containerboard business for $1.8 billion in cash; closing expected by the end of PCA's third quarter of 2025, subject to customary conditions and regulatory approvals
Acquired business includes two containerboard mills (Gladstone, VA and Massillon, OH) with approximately 800,000 tons of production capacity, plus eight sheet feeder and corrugated plants in the U.S.
Acquired business generated approximately $1.2 billion in sales and $212 million of EBITDA for the 12 months ended April 30, 2025
Purchase price represents 8.5X LTM EBITDA, or 6.6X including $60 million of expected pre-tax synergies, fully realized within two years after closing
Financing of $1.5 billion of new debt ($1.0 billion term loans and $500 million notes) plus cash on hand; pro forma leverage expected at 1.7X versus 0.9X currently
Management expects the acquisition to be immediately accretive to earnings and estimates incremental net interest expense of about $100 million per year
Presentation notes ongoing maintenance capital for the acquired business of $40 to $50 million per year and a full step-up in asset tax basis

03—Questions

Frequently Asked Questions

What is PCA acquiring and for how much?
PCA agreed to acquire the containerboard business of Greif, Inc. for $1.8 billion in cash, including two containerboard mills and eight sheet feeder and corrugated plants in the United States.
When is the acquisition expected to close?
The company expects the transaction to close by the end of its third quarter of 2025, subject to customary conditions and regulatory approvals, including HSR Act review.
How will the acquisition be financed and how will leverage change?
PCA expects to fund the deal with $1.5 billion of new debt ($1.0 billion in bank term loans and $500 million in notes) and cash on hand. Pro forma net debt to EBITDA leverage is expected to be 1.7X, compared with 0.9X currently.
What synergies and earnings impact does management expect?
Management expects approximately $60 million of pre-tax synergies, about half realized by the end of the first year and the remainder by the end of the second year. The acquisition is expected to be accretive to earnings immediately.
What are the key financial costs of the deal?
The company estimates incremental net interest expense of approximately $100 million per year and ongoing maintenance capital for the acquired business of $40 to $50 million per year.

04—Continue

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