US-based industrial packaging supplier Greif has agreed to divest a 50% stake in its Flexible Packaging joint venture (FPS) to plastic film manufacturer Gulf Refined Packaging (GRP).

The deal is valued at $123m and subject to certain conditions and post-closing adjustments.

It is expected to close by April and Greif will adjust its Fiscal 2022 guidance accordingly.

Greif plans to use the proceeds from the deal to repay its debts.

Greif president and CEO Pete Watson said: “While we have worked closely with our joint venture partner, each partner held different views of the appropriate path forward for the FPS business.

“As a result, we entered into a process to determine a single owner and utilised our disciplined capital allocation framework, which resulted in an agreement to sell our ownership stake to GRP for significant value.

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“I would like to thank our FPS colleagues for their hard work over the last 11 years and for their continued commitment to the business during the transition ahead.”

The acquisition comes after Greif reported its fourth quarter (Q4) and full-year fiscal year 2021 (FY21) results last month.

The company posted a net income of $390.7m, or $6.54 for each of its diluted Class A shares, for the full year.

Its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were up by $121.6m to $764.2m, while the net cash provided by its operating activities decreased by $58.7m to $396.0m.

Greif said that its total debt decreased by $261.4m to $2.22bn in Q4, with the company’s net debt falling by $280.1m to $2.1bn.

During the first quarter of the year, the company’s former Rigid Industrial Packaging & Services and Flexible Products & Services segments were combined into one reportable segment, which trades as the Global Industrial Packaging segment.