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Greif to Acquire Industrial Packaging Manufacturer Caraustar Industries For $1.8 Bln

Greif Bros. ( GEF ) said early Thursday it has entered into a definitive agreement to acquire Caraustar Industries Inc., a recycled paperboard manufacturer, in a cash transaction valued at $1.8 billion.

Greif will purchase Caraustar from an affiliate of H.I.G. Capital. The transaction is expected to close during Q1 2019, subject to customary closing conditions, including regulatory clearances.

The addition of Caraustar will be immediately accretive to Greif's margins, earnings per share and free cash flow per share before synergies, Greif said in a statement, adding that it expects "strong" pro-forma free cash flow to drive rapid deleveraging.

Greif expects the transaction to increase its US sales to roughly two-thirds of total consolidated sales from approximately half for fiscal 2018. Also, the percentage of Greif's sales from paper packaging will expand to half of total consolidated revenues compared to 23% for fiscal 2018.

The acquisition should generate annual run-rate cost synergies of at least $45 million within 36 months of closing, the company said.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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