Containerboard and corrugated packaging manufacturer Packaging Corporation of America (PCA) has signed an agreement to acquire Boise for $1.9bn, which includes $714m of outstanding indebtedness.
As a result of the acquisition, PCA's corrugated products volume will increase by around 30% and its market presence will expand into the Pacific Northwest.
Acquiring the corrugated shipping boxes producer will additionally allow PCA to increase its containerboard capacity by 42% to 3.7 million tonnes. It has also announced the expansion of paper machine number 2 (D2) at Boise's DeRidder mill.
PCA expects to generate pre-tax benefits of approximately $105m through mill grade optimisation, sales mix and cost reductions, lower transportation costs, corrugated products optimisation, and SG&A cost reductions.
PCA executive chairman Paul Stecko said the low-cost DeRidder containerboard mill provides almost one million tonnes of primarily lightweight containerboard following the D2 machine conversion.
"The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies. It provides the containerboard that PCA needs to support our strong corrugated products growth," Stecko added.
Combined, the companies generated $5.5bn in sales and $879m in earnings before interest, taxes, depreciation, and amortisation (EBITDA) from 30 June 2012 to 30 June 2013.
The combined packaging business generated 75% of sales and 83% of EBITDA over the period, with the remainder generated by the paper business of Boise.