Riverwood and Graphic Packaging merge

Riverwood, parent company of Riverwood International, and Graphic Packaging International have jointly announced a definitive merger agreement that will create a global paperboard packaging company with leading market positions serving the beverage, food and consumer products industries.

Riverwood, parent company of Riverwood International, and Graphic Packaging International have jointly announced a definitive merger agreement that will create a global paperboard packaging company with leading market positions serving the beverage, food and consumer products industries.

Under the terms of the transaction, Graphic Packaging, the leader in folding carton consumer products packaging, and Riverwood, the leader in multi-pack beverage packaging, will merge in a stock transaction with an enterprise value of approximately $3 billion (€2.8bn).

The combined company will have 2002 revenues of approximately $2.3 billion and EBITDA in excess of $400 million. The management board says it has identified broad-based operating synergies of $55 million per year, which are expected to be realised in the third year after closing. The transaction, which has been approved by the board of directors of both companies, is expected to provide a significant boost to profits and any improved cash flow would be used to reduce debt.

The new company will have the scale, technologies and product portfolio to enhance both companies' strong relationships with beverage, food and consumer products companies worldwide - the company management said.

The purpose of the venture is to benefit from enhanced growth opportunities, broader value-added product lines, efficient operational practices and a global delivery network.

The merger is expected to boost future growth of both companies' existing packaging businesses by combining Graphic Packaging's front-end sales and marketing, converting operations and strong customer relationships with Riverwood's experience in providing total packaging systems.

Graphic Packaging chairman and CEO, Jeffrey Coors, will serve as executive chairman of the combined company, and Riverwood president and CEO, Steve Humphrey, will keep the same title. Graphic Packaging chief operating officer, David Scheible, will serve as executive vice president of commercial operations for the new company. The board of directors will consist of nine members: Coors and Humphrey, as well as five independent directors and two directors nominated by Riverwood's investors. The combined company will employ more than 8,000 people on four continents and will be headquartered in Atlanta, Georgia, US.

"We are uniting two strong companies that we believe will be the leading single source provider of innovative paperboard packaging solutions," said Coors. "Our objective is to achieve accelerated growth in the global consumer, food and beverage packaging industries by capitalizing on the best from each organisation."

"This is a merger of two companies that know each other very well and share similar operating values," said Humphrey. "We will have a global company with the scale and resources to become a stronger partner with our customers. We believe this is the best way to ensure future profitable growth and create long-term value."

The transaction is expected to be completed in the third quarter of 2003, subject to customary shareholder and regulatory approvals.