The structure of the transaction will enable KapStone to realize a tax benefit that has an estimated net present value of approximately $100m. Taking this benefit into account, the net purchase is about $515m.
Victory Packaging, in Houston, Texas, has 65 packaging distribution centers in the US, Mexico and Canada and serves customers who have complex needs not attractive to other integrated box manufacturers.
“Victory currently buys approximately 370,000 tons of corrugated products annually of which KapStone expects to supply an incremental 115,000 tons,” said Roger Stone, CEO, KapStone.
“The company will still rely heavily on their current supplier base to fill the remainder. Conservatively estimated, these synergies are expected to reach $30m of EBITDA in 24 months.”
KapStone Paper and Packaging Corporation is the fifth largest producer of containerboard and corrugated packaging products and is the largest kraft paper producer in the US.
The Company is the parent company of KapStone Kraft Paper Corporation and KapStone Container Corporation which includes four paper mills and 22 converting plants across the US. The business employs approximately 4,600 people.