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Packaging Corp. To Purchase Boise

|Includes: BZ, Packaging Corporation Of America (PKG)

Originally published at

Packaging Corp. of America (NYSE:PKG) has announced it will purchase Boise Inc. (NYSE:BZ) in a deal valued at $2.0B. The paper and packaging companies, once combined, will vastly improve and expand Packaging Corp.'s containerboard business. The deal involves Boise shareholders receiving $12.55 cash per share, 26% above the closing price Friday, and the assumption of $714M in debt. Both company's boards approved the acquisition, which is set to close in fourth quarter. Packaging Corp. expects its containerboard capability will improve by 42% to 3.7 million tons. For the 12 months ending June 30, the combined companies generated $5.5B in sales with earnings of $879M. Boise has not performed very well in recent months because of decreased paper sales, and believes that this acquisition is the best move to maximize shareholder value.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.