Carton Companies Tie the Knot

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Motor oil carton supplier Altivity Packaging LLC and Graphic Packaging Corp. plan to merge to form a new company called Graphic Packaging Holding Co. with an estimated $4.4 billion value.

Altivity is a privately held producer of folding cartons, and provides coated recycled boxboard and bag packaging. Graphic Packaging, based in Marietta, Ga., provides paperboard packaging for a wide variety of products to food, beverage and other consumer products companies.

James Murphy, West Coast account manager for Chicago-based Altivity Packaging, told Lube Report the merged company will continue to provide packaging for lubricants and other petroleum products. Theyre a very large company, and have a lot of plants we could use, Murphy said. Some of their expertise in other areas of flexible packaging are going to help us too – its going to be great. Murphy serves as secretary on the board of directors of the Petroleum Packaging Council.

In addition to motor oil packaging, Murphy said Altivitys packaging for petroleum products include heat transfer labels for plastic bottles, folding cartons for gas additive packages, flexible packaging and pouches.

Altivity was formed in June 2006 when TPG Capital acquiredSmurfit-StoneContainer Corp.’s Consumer Packaging business. Altivity merged with Field Container Co. in August 2006.

The Graphic-Altivity merger will bring together 86 manufacturing and converting facilities, and about 15,600 people on five continents. The new company will be based in Marietta, Ga., and retain a significant presence in Chicago.

Both companies boards of directors have approved the merger, which is expected to be completed in the fourth quarter of this year, subject to shareholder and regulatory approvals. Affiliates of TPG Capital, who control and own the majority of Altivity Packaging, have agreed to the transaction. Graphic Packagings three largest shareholders, who on a combined basis control more than 60 percent of Graphic Packagings outstanding common stock, have agreed to vote in favor of the merger.

In their July 10 announcement, the companies said they expect the merger to create stockholder value by expediting growth opportunities, achieving cost savings and improving the credit profile of the newly-formed company by speeding up debt reduction. Upon closing, Graphic Packagings shareholders will initially own 60 percent of the new companys common stock, while shareholders of Altivity Packaging will own 40 percent.

The transaction values Altivity Packaging at $1.75 billion, based on its $1.1 billion net debt as of March 31, and Graphic Packagings 30-day average stock price of $4.92 per share as of July 5. Graphic Packaging has obtained committed financing to refinance Altivity Packagings existing indebtedness. During 2006, Graphic Packaging posted $2.4 billion in net sales, and a net loss of $100.5 million.

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Cartons    Packaging    Packaging Containers