(Reuters) - International Paper Co (IP.N) has agreed to combine its North America consumer packaging business with Graphic Packaging Holding Co (GPK.N) in a deal that values the International Paper division at $1.8 billion, the companies said on Tuesday.
Graphic Packaging will own 79.5 percent of the partnership and will be sole operator, and International Paper will own the remainder. The partnership is valued at $6 billion and will assume $660 million of International Paper debt, the companies said.
International Paper’s North America consumer packaging business produces solid bleached sulfate paperboard and paper-based foodservice products. It is projected to generate adjusted earnings before interest, taxes, depreciation and amortization of $210 million in 2017.
The deal is projected to be accretive to earnings in its first year and generate $75 million in synergies by the end of its third year, the companies said. Graphic Packaging said it will not change its board of directors as a result of the partnership.
Bank of America Corp (BAC.N) and Alston & Bird LLP advised Graphic Packaging.
Reporting by Greg Roumeliotis in New York; Editing by Jeffrey Benkoe