Packaging Corp. Of America To Buy Boise For $1.995 Bln - Quick Facts

(RTTNews) - Packaging Corporation of America or PCA (PKG), a maker of containerboard and corrugated packaging products, has agreed to acquire all outstanding shares of Boise Inc. (BZ) for $12.55 per share cash, for $1.995 billion of aggregate transaction value, including $714 million of outstanding indebtedness of Boise.

The combined companies generated $5.5 billion in sales and $879 million in EBITDA, excluding special items, in the last twelve months ended June 30, 2013 or LTM.

PCA's containerboard capacity would increase to 3.7 million tons from its current level of 2.6 million tons, inclusive of the announced expansion of paper machine number 2 (D2) at Boise'sDeRidder mill. PCA's corrugated products volume would rise by nearly 30% as a result of the acquisition, and PCA's market presence would expand into the Pacific Northwest.

Synergies are likely to generate pre-tax benefits of roughly $105 million and are expected to be fully realized within 3 years of closing. The synergies are anticipated to come from mill grade optimization, sales mix and cost reductions, lower transportation costs, corrugated products optimization, as well as SG&A cost reductions.

The purchase price represents a multiple of 6.7 times adjusted LTM EBITDA of $297 million, excluding items, and including the $105 million in benefits from synergies, the purchase price represents a multiple of 5.0 times LTM EBITDA. The acquisition, which is expected to be accretive to earnings immediately, may close in the fourth quarter of 2013 with committed debt financing.