Graphic Packaging Holding Company (GPK - Free Report) yesterday announced that one of its completely-owned subsidiaries, Graphic Packaging International, LLC, has signed an agreement to acquire PFP, LLC along with PFP Dallas Converting, LLC. Financial consideration of the buyout has not been disclosed.
PFP — an independent converter — primarily engages in manufacturing air-filter frames (mainly paperboard-based). It operates two manufacturing facilities; one in Lancaster, TX and the other in Lebanon, TN. PFP was founded in 1999 and is headquartered in Tennessee.
Details of Buyout
As noted, in the last 12 months, PFP’s earnings before interest, tax, depreciation and amortization margin was solid. Moreover, its paperboard, mainly coated unbleached kraft paperboard (CUK), conversion totaled roughly 18 thousand tons.
Addition of PFP to the portfolio will drive Graphic Packaging Holding’s air-filter frame (paperboard-based) business. It will result in cost synergies and boost the company’s CUK paperboard tons.
This buyout will be integrated with Graphic Packaging Holding’s Americas Paperboard Packaging segment. In the first quarter of 2018, the company generated roughly 67.1% of its net sales from this segment. In the quarter, the segment’s sales grew 24.9% on a year-over-year basis.
Graphic Packaging Holding’s Inorganic Initiatives
The above-mentioned transaction is consistent with Graphic Packaging Holding’s policy of acquiring meaningful businesses to gain access to improve its product lines and market exposure. It’s worth mentioning here that the company started its air-filter frame (paperboard-based) business with the acquisition of Carton Craft Corporation and its related company Lithocraft, Inc in July 2017.
In addition to the above-mentioned buyouts, Graphic Packaging Holding combined its business with North America Consumer Packaging business of International Paper Company (IP - Free Report) in January 2018. In December 2017, the company acquired folding-carton producer, Seydaco Packaging Corp. as well as its related companies; National Carton and Coating Co., and Groupe Ecco Boites Pliantes Ltée. Also, in October 2017, the company acquired Norgraft Packaging, S.A., a folding carton manufacturer.
Zacks Rank & Key Picks
With a market capitalization of nearly $4.6 billion, Graphic Packaging Holding currently carries a Zacks Rank #3 (Hold). In the last 60 days, earnings estimates for the stock for 2018 remained unchanged at 87 cents per share while increased roughly 2% to $1.03 for 2019.
Graphic Packaging Holding Company Price and Consensus