Packaging Corporation of America to acquire Greif containerboard business in $1.8bn deal

Packaging Corporation of America (NYSE: PKG) has entered a definitive agreement to acquire the U.S. containerboard business of Greif, Inc. for $1.8 billion in cash, a move expected to significantly expand PCA’s manufacturing footprint and enhance its vertically integrated operations across the United States. The acquisition includes two high-capacity mills and eight corrugated plants and is projected to close by the end of Packaging Corporation of America’s third quarter in 2025, subject to customary closing conditions and regulatory approvals.

The American paper and packaging manufacturer is targeting an immediate accretive impact on earnings and expects to finance the deal through $1.5 billion in new debt, supplemented by existing cash reserves. Post-deal, Packaging Corporation of America’s pro forma net debt to EBITDA ratio will stand at approximately 1.7x, reflecting a relatively conservative leverage profile within the industry.

What is included in the Greif containerboard business and how does it fit into PCA’s national manufacturing strategy?

The containerboard operations acquired from Greif comprise two containerboard mills with a combined production capacity of approximately 800,000 tons per annum, as well as eight sheet feeder and corrugated packaging plants. The assets are geographically distributed across the United States, positioning them to support Packaging Corporation of America’s customer demand while reducing logistics costs through regional optimization.

For the 12-month period ending April 30, 2025, the business generated roughly $1.2 billion in revenue and $212 million in EBITDA. Packaging Corporation of America executives have characterized the acquired operations as a strategic complement to their existing mill system, particularly in light of the company’s ongoing expansion in corrugated products.

The American containerboard manufacturer currently operates eight mills and 86 corrugated products plants and related facilities. The addition of the Greif assets is anticipated to improve capacity integration and throughput without the need for immediate major capital expenditures.

How much synergy value does PCA expect to unlock and on what timeline will those benefits materialize?

Packaging Corporation of America projects pre-tax synergies of approximately $60 million, with half expected to be realized within the first 12 months post-closing and the remainder by the end of year two. These benefits are expected to come from operational efficiencies, grade optimization across mills, enhanced integration between plants and mills, and reduced transportation costs from better geographic alignment.

Based on a trailing EBITDA multiple of 8.5x, the acquisition price appears to reflect standard valuation metrics for assets with recurring cash flow profiles. However, after factoring in the $60 million in projected synergy benefits, the effective purchase price drops to a multiple of 6.6x LTM EBITDA—significantly more attractive when viewed through the lens of operational integration.

Institutional sentiment has generally interpreted the deal as a smart use of Packaging Corporation of America’s balance sheet flexibility, with analysts noting the likelihood of improved profitability from tighter system integration and scale benefits.

Why are institutional investors viewing this as a strong strategic fit despite the rising interest rate environment?

Despite elevated borrowing costs in 2025, institutional investors appear to back the deal’s capital structure, which includes $1.5 billion in newly raised debt. With net leverage rising only to 1.7x EBITDA, Packaging Corporation of America retains ample headroom to weather macroeconomic fluctuations and invest in longer-term modernization or sustainability initiatives.

Furthermore, the American packaging manufacturer has a track record of conservative capital deployment and robust cash flow generation. In this context, the Greif acquisition is seen as an earnings-accretive and operationally synergistic expansion rather than a high-risk growth bet.

Given the asset-light approach to synergy realization—emphasizing mill-grade optimization and logistics streamlining rather than new construction—analysts view the execution risk as relatively low. The transaction also consolidates PCA’s position as the third-largest containerboard producer in North America, strengthening its competitive stance against firms like International Paper and WestRock.

How does this transaction align with Packaging Corporation of America’s long-term growth strategy in the packaging sector?

Packaging Corporation of America CEO Mark Kowlzan framed the acquisition as a continuation of the American paper products manufacturer’s profitable growth roadmap, citing the mill footprint and customer base as highly complementary. He emphasized that the facilities would support continued growth in corrugated products and could unlock further opportunities for high-return investments across the value chain.

President Tom Hassfurther echoed these sentiments, characterizing the deal as a cultural fit and citing shared customer-centric values, innovation efforts, and safety-first philosophies between both organizations. He also underscored the opportunity to apply PCA’s combined operational expertise to drive new growth across the acquired sheet feeder plants.

Packaging Corporation of America’s leadership has historically prioritized accretive bolt-on acquisitions with immediate customer overlap and minimal integration disruption. This transaction appears to follow that formula closely, with PCA acquiring a fully operational, customer-embedded business without assuming legacy liabilities or entering new geographic territories.

What are the broader sector implications as consolidation continues across the U.S. containerboard and corrugated industry?

The Greif divestiture and Packaging Corporation of America’s strategic acquisition come amid ongoing consolidation in the U.S. paper and packaging sector. Demand for containerboard has remained stable, supported by the continued expansion of e-commerce and supply chain modernization, while mill operators focus on operational efficiency amid cost inflation.

In this environment, scale and integration are increasingly viewed as competitive advantages. By adding mid-sized but fully integrated capacity, PCA gains the flexibility to better match supply with downstream corrugated product demand, while improving margin profiles across its existing facilities.

Other major players in the sector, such as WestRock and International Paper, have similarly sought to optimize footprint, invest in mill modernization, and align upstream capacity with downstream converting capabilities. Industry observers suggest that Packaging Corporation of America’s move may trigger further consolidation among mid-tier operators or under-utilized assets held by conglomerates seeking to streamline focus.

What outlook do analysts have for PCA’s earnings, debt service, and post-deal investment flexibility?

Analysts expect the deal to be earnings-accretive immediately upon closing, with low execution risk due to the operational maturity of the acquired mills and plants. With a forecasted EBITDA contribution of over $270 million by the end of year two—assuming full synergy realization—the acquisition provides both immediate and compounding earnings leverage.

Debt service remains manageable within PCA’s cash flow generation profile, and the pro forma leverage ratio suggests flexibility for additional high-return capital investments or even shareholder returns via dividends or buybacks in future quarters.

Long-term, Packaging Corporation of America’s margin expansion strategy is likely to benefit from this acquisition’s operational leverage, particularly in optimizing freight logistics and unlocking higher-grade containerboard throughput across its network. In a competitive but relatively mature market, such efficiencies are expected to be key differentiators.

Can PCA unlock value from this deal without overextending financially or operationally?

With its disciplined financial structure, strategic asset selection, and operational expertise, Packaging Corporation of America appears well positioned to extract meaningful value from the Greif containerboard acquisition. The $1.8 billion transaction strengthens PCA’s national footprint, integrates well into its corrugated supply chain, and adds stable EBITDA with modest capital outlay.

Given its history of conservative acquisitions and long-standing mill expertise, the American paper packaging manufacturer is likely to meet or exceed its synergy targets—especially in freight and mill-grade optimization—without requiring major capital infusions. The deal reflects a calculated expansion of PCA’s scale and product capability, potentially positioning it as a leaner, more integrated rival to the top containerboard producers in North America.