Silgan set to acquire Graham Packaging in $4 billion deal
Rigid consumer packaging products company Silgan Holdings (NASDAQ:SLGN) has entered into an agreement to acquire fellow packaging company Graham Packaging (NYSE:GRM) in a deal valued at $4.1 billion.
Silgan is offering Graham shareholders 0.402 shares of Silgan common stock and $4.75 in cash, which implies a value of $19.56 per share, a 17% premium based on Silgan's closing price last night.
Graham Packaging is a supplier of value-added rigid plastic containers for the food, specialty beverage and consumer products markets.
"This acquisition creates the premier Food and Specialty Beverage packaging company, allowing Silgan to significantly broaden its ability to serve these important markets with multiple rigid packaging options," said Tony Allott, Silgan's President and CEO.
"Graham Packaging is a differentiated plastic packaging franchise with deep customer relationships and a strong track record for innovation. In combination, we anticipate building enhanced relationships with global customers in our target end markets."
The combined company will have annual sales of over $6.2 billion, 17,000 employees and operate 180 manufacturing facilities in 19 countries.
Silgan said the transaction to be earnings accretive in the first full year, and added that is it forecasting $500 million in free cash flow from the first year of operations. The acquisition is also expected to generate cost synergies of $50 million by the third year.
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