Greif To Buy Caraustar Industries In $1.8 Bln Deal

(RTTNews) - Greif Inc. (GEF, GEF.B) said that it agreed to acquire Caraustar Industries, Inc., a recycled paperboard and packaging solutions company, from an affiliate of H.I.G. Capital, in a cash transaction valued at $1.8 billion.

The transaction is expected to close during the first quarter of calendar year 2019, subject to customary closing conditions, including regulatory clearances.

Greif noted that the addition of Caraustar will be immediately accretive to Greif's margins, earnings per share and free cash flow per share before synergies.

The addition of Caraustar is expected to increase Greif's U.S. sales to roughly two thirds of total consolidated sales from approximately half for fiscal 2018. In addition, the percentage of Greif's sales from paper packaging will expand to approximately half of total consolidated revenues compared to 23 percent for fiscal 2018.

The transaction is expected to generate annual run-rate cost synergies of at least $45 million within 36 months of closing through an identified combination of back office savings; transportation optimization; recycled fiber savings; operational improvements; and other procurement-related activities.