Greif, Inc. (Delaware, Ohio, USA) a global leader in industrial packaging products and services, announced Dec. 20, 2018 that it has entered into a definitive agreement to acquire Caraustar Industries, Inc., a leading 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. 

Caraustar is a market leader in the production of uncoated recycled paperboard (URB) and coated recycled paperboard (CRB), with a variety of applications that include tubes and cores and a diverse mix of specialty products. Based in Austell, Georgia, Caraustar's footprint includes over 80 operating facilities throughout the United States. For the last twelve months ended September 30, 2018 Caraustar generated sales of $1.4 billion and EBITDA of $174 million. Based on trailing twelve month actual volume, adjusted for current market conditions as of September 30, 2018, the run-rate EBITDA is $220 million.

"Caraustar offers an exceptional strategic and cultural fit for Greif," said Greif's President and CEO Pete Watson. "Its complementary paper packaging and recycled fiber operations will drive significant free cash flow growth, improve balance and profitability within the Greif portfolio and increase Greif's exposure to U.S. industrial and consumer end markets. Most importantly, Greif and Caraustar share the same dedication to providing industry-leading service to all customers. I am excited to welcome our new colleagues to the Greif family and look forward to working closely with them."

"We are excited about today's announcement and what it means for Caraustar's customers and employees," added Caraustar President and CEO, Mike Patton. "Greif is a well-known market leader with a strong manufacturing base. Our customers will benefit from Greif's customer service focus and broad product offering and our employees will join a culture with a strong legacy for service and quality."

The transaction significantly enhances Greif's scale and scope in the industrial packaging market, creating significant competitive advantages and long-term operating leverage. In addition, the transaction:

• Is immediately accretive to earnings and financial profile. The addition of Caraustar will be immediately accretive to Greif's margins, earnings per share and free cash flow per share before synergies. Strong pro-forma free cash flow is expected to drive rapid deleveraging, setting the stage for meaningful equity accretion and enhancing Greif's strategic flexibility for capital deployment going forward.
• Strengthens and balances Greif's portfolio. 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.
• Provides significant value creation through substantial cost synergies and performance improvements. 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.
• Increases the scale and breadth of Greif's paper packaging product offering. Caraustar is a market leader in uncoated recycled paperboard (URB) and coated recycled paperboard (CRB) with an attractive mix of industrial and consumer customers. Additionally, Caraustar sells a variety of specialty paper products that will complement Greif's Paper Packaging & Services specialty portfolio.
• Offers strong cultural fit and alignment. Caraustar operates a business with close operational adjacency to Greif's current mill operations and possesses an aligned operational philosophy and close cultural overlap.