Graphic Packaging and Altivity merge

By Ahmed ElAmin

- Last updated on GMT

Related tags Cost savings Graphic packaging Packaging and labeling Packaging Paperboard

Graphic Packaging Co. and Altivity Packaging this week agreed to
merge, combining operations to become a paperboard packaging
supplier with $4.4bn in sales worldwide.

The new company will be called Graphic Packaging Holding Co.

The packaging sector has been consolidating, narrowing the range of suppliers for food processors, but also potentially helping to cut costs.

In a statement Graphic Packaging said the combination with Altivity promises to yield significantly expanded product offerings, market reach, and increased technology capabilities.

The combined company will have 86 manufacturing and converting plants employing about 15,600 people worldwide.

The new entity will have 47 folding carton facilities, 12 multi-wall and specialty bag plants, 10 paperboard mills, six flexible packaging plants, five ink manufacturing plants, three label plants and three packaging machinery manufacturing plants worldwide.

The management teams believe they will be able to generate about $90m in cost savings.

The merger is expected to be completed by 2011, with the bulk of the combinated realised by 2009, the companies stated.

Altivity Packaging said it expects to achieve an operating income of $200 million in the current financial year, excluding one-time costs to achieve cost savings and other one-off expenses.

Altivity's management forecasts the merger will give it stand-alone cost reductions of about $50m in 2007.

The company expects to achieve an additional $45m in annual cost savings by 2009.

"The merger is expected to create significant stockholder value by expediting growth opportunities, achieving significant cost savings and enhancing the credit profile of the newly-formed company through accelerated debt reduction," the companies stated.

The transaction values Altivity Packaging at about $1.75 billion.

"The new company will benefit from strong positions in multiple packaging sectors including paperboard, folding carton, multi-wall and specialty bags, flexible packaging and labels, positioning us to provide our customers greater choice, better service, higher quality and more innovative solutions for all of their packaging needs," the companies stated.

Graphic Packaging sells paperboard and paperboard-based products mainly to multinational brewers, soft drink bottlers, food companies, and other consumer products companies.

The company's major customers include Anheuser-Busch, SABMiller, Molson Coors, numerous Coca-Cola and Pepsi bottling companies, Inbev and Asahi Breweries.

The company's non-beverage consumer products packaging customers include Kraft Foods, General Mills, Nestle Group, Unilever, PepsiCo, Kellogg's, the Schwan Food Company and Perseco.

The merger market for packaging companies has been heating up over the past year.

For example, Rexam, the number one beverage can maker, last month completed its divestment of its European glass packaging business and is now preparing for its takeover of Owens-Illinois' plastics division.

Deals are currently under way for a buyout of Alcan, with provides aluminium packaging materials globally.

Related topics Processing & packaging

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