Graphic Packaging to Acquire AR Packaging from CVC Funds for $1.45 Billion in Cash

In huge merger news, Graphic Packaging will acquire AR Packaging Group AB, Europe’s second-largest producer of fiber-based consumer packaging, for approximately $1.45 billion in cash, subject to customary adjustments.

Graphic Packaging Holding Company and CVC Capital Partners Fund VI announced the definitive agreement, which will enhance Graphic Packaging’s global scale, innovation capabilities, and value proposition for customers throughout Europe and bordering regions.

The proposed acquisition of AR Packaging is expected to add $1.1 billion in annual sales and $160 million in annual adjusted EBITDA. The combination is expected to drive total synergies of $40 million over 36 months following close.

“AR Packaging is a leader in the attractive and growing market for sustainable packaging in Europe,” said Michael Doss, Graphic Packaging’s president and CEO. “The large, distributed footprint of AR Packaging’s 25 converting facilities across Eastern and Western Europe provides significant scale and cost efficiency benefits, strengthening our combined presence and ability to service customers throughout Europe and globally.”

“The acquisition of AR Packaging expands our opportunities to serve and grow in markets around the world with our sustainable packaging solutions,” added Stephen Scherger, Graphic Packaging’s EVP and CFO. “The combination, together with our previously announced acquisition of Americraft Carton, supports our growth goals and positions Graphic Packaging to consistently deliver organic sales growth at the high end of our 100 to 200 basis points goal as outlined in Vision 2025. The significant cash flow generation capability of the combination will drive strong returns and is expected to return Graphic Packaging to our long-term 2.5-3.0x target leverage range within 24 months following close.”

“I am proud of the progress we have made in establishing a clear strategy and building AR Packaging into a respected provider of packaging solutions,” said Harald Schulz, AR Packaging’s president and CEO. “Graphic Packaging’s shared approach to customer service and deep focus on providing innovative, sustainable solutions closely aligns with how we operate our own business, making them an ideal partner. The ability to leverage beneficial value chain integration, from paperboard manufacturing to carton converting, provides increased possibilities to offer sustainably optimized solutions to our customers. Our team looks forward to joining with the Graphic Packaging team to become the premier global provider of sustainable fiber-based packaging solutions.”

“We are very proud of the progress AR Packaging has made during our partnership. It has been a pleasure working with Harald and his excellent team to develop and roll out numerous new products, as well as investing to support an active M&A agenda to accelerate the growth of the business into a truly global player. We are pleased to be handing AR Packaging over in such a strong position and to have found a new owner that shares management’s vision for the future direction of the business,” said Lave Beck-Friis, managing director at CVC.

“The transaction, which has been unanimously approved by the Boards of Directors of Graphic Packaging and AR Packaging, is expected to close in four to six months, subject to regulatory approvals and other customary closing conditions.