Graphic Packaging plans share sell-off to fund Sierra Pacific takeover
The US-based paperboard packaging company said the take over of the Californian firm would give it an important foothold in the West Coast market. The deal is expected to go through by the second quarter of 2011.
"Graphic Packaging has a strong record of achieving performance improvement objectives and of successfully integrating businesses," said company president and CEO David Scheible. "This acquisition not only provides our customers with important enhanced operating synergies, but Sierra's values, vision and culture of sustainability dovetail nicely with our own growth strategy for the future."
Sierra Packaging, headquartered in Oroville, California, produces folding cartons, beverage carriers and corrugated boxes.
Share sell-off
Graphic Packaging said it will finance the transaction by selling 47m common stock shares. The Georgia company explained it would also look to repurchase between 6.5m and 7.475m shares.
Any cash left over from the $53m buyout would be used to cut company debt and “for general corporate purposes”, it added.
Preliminary Q1 results
It also announced net sales of $1.06bn in its preliminary first quarter results for 2011 – a year-on-year drop of just 0.3 per cent. Strong storms in February across the US had hit volumes as the company was forced to close plants. Graphic forecast adjusted EBITDA of $142.7m, a slight decrease compared to the same period last year.
It also expects net income of $26.7m, compared to $6.3m in the first quarter of 2010. The year-on-year improvement is due to lower restructuring, interest and tax expenses, said the company.
