Packaging Corporation of America to acquire TimBar

LAKE FOREST - Packaging Corporation of America said it will acquire TimBar Corp., a large independent corrugated products producer, in a cash-free, debt-free transaction for a cash purchase price of $386 million.

PCA will acquire five corrugated products plants, two fulfillment centers and four design centers located primarily in the eastern and southeastern U.S. The transaction is structured as a purchase of assets resulting in a full step-up of the assets to fair market value.

TimBar, with sales of $324 million in 2015, provides solutions to customers in the higher margin retail, industrial packaging and display and fulfillment markets with a focus on multicolor graphics and technical innovation.

As a result of the acquisition, PCA's containerboard integration level is expected to increase by over 200,000 tons, or 6 percent, from its current level of 87 percent and will allow for further optimization and enhancement of mill capacity.

"Following our successful integration of Boise, including the capacity we now have at the DeRidder, LA mill, this acquisition is an excellent fit, both geographically and strategically, with substantial benefits and synergies," said PCA Chairman and CEO Mark Kowlzan. "TimBar is a well-capitalized company with a commitment to continuous improvement, innovation and safety in their operations.

"This, along with their customer focus, has allowed them to achieve excellent operating margins and consistent results. We look forward to working together to further enhance our strong balance sheet, financial results and cash flow consistent with our strategy to return significant value to our shareholders."

Closing is expected in the third quarter of 2016. The company expects to finance the transaction with a new term loan.