International Paper Co. plans to decrease its ownership interest in a subsidiary of Atlanta-based Graphic Packaging.
Graphic Packaging Holding Company (NYSE: GPK) told investors Tuesday the company’s increasing its stake in a partnership with International Paper Co. (NYSE: IP) for an aggregate price of $250 million. The move trims International Paper’s ownership in the Graphic Packaging subsidiary, Graphic Packaging International Partners LLC, from approximately 21.6% to 18.3%. The deal is expected to close Jan. 29.
Graphic Packaging said it’ll fund the purchase with a draw on its domestic revolving credit facility that sits above $1.4 billion.
In 2018, Memphis-based International Paper entered into a deal to contribute its North America Consumer Packaging Business to Graphic Packaging in a transaction valued at $1.8 billion. The transferred division included two coated paperboard mills and four converting facilities, three in the U.S. and one in the U.K.
International Paper can continue to reduce its minority ownership interest in the subsidiary every 180 days, with the next potential transaction date in July 2020.
“Our strong cash flow generation and healthy balance sheet provide us the flexibility to purchase the initial $250 million of minority interest from International Paper,” said Graphic Packaging CEO Michael Doss in a news release. “The 2018 transaction with International Paper has successfully created value for our customers and stakeholders while building a leading integrated paperboard packaging platform. We appreciate the confidence International Paper placed in us to build and grow the business. The transaction significantly increased our addressable market and vertical integration opportunities, while accelerating our presence in fiber-based packaging solutions.”
Graphic Packaging on Tuesday reported fourth-quarter earnings of $33 million, meeting Wall Street expectations. For the year, the company reported profit of $206.8 million. Revenue was $6.16 billion.
By Eric Mandel