12.9 billion! The US packaging giant with annual revenue of 60 billion won Grave's containerboard business!
author: Annie
2025-07-25
Business Overview and Synergy Outlook
The acquired containerboard business had sales of $1.2 billion in the 12 months ended April 30. The business includes two containerboard mills in Ohio and Virginia with a total annual production capacity of approximately 800,000 tons. In addition, Graves owns eight secondary and tertiary mills throughout the United States and one tertiary mill in North Carolina.
American Packaging is the third largest containerboard manufacturer in North America and a leading offset paper producer. The company operates eight paper mills and 86 corrugated packaging plants in the United States. Headquartered in Lake Forest, Illinois, its business operations are mainly concentrated in the United States. The group's business consists of three divisions: Packaging Division, Paper Division, and Corporate and Other Division.
American Packaging owns 7 containerboard mills, which can produce containerboard with various properties and special grades. As of December 31, 2024, the company's total annual capacity of containerboard is approximately 27.964 billion square meters. American Packaging achieved annual net sales of US$8.383 billion (approximately RMB 60.7 billion) in 2024, with net sales of US$7.691 billion in the packaging department and US$625 million in the papermaking department.
PCA expects that the acquisition will generate $60 million in pre-tax earnings within two years of the transaction. PCA CEO Mark Corzan said that the expected synergies will come from many aspects, including: improving plant operating efficiency and capacity utilization; improving integration; optimizing plant grades; and reducing transportation costs. Corzan emphasized that Greve's plant is "perfectly complementary" to PCA's existing system and will provide the necessary containerboard supply for the continued growth of PCA's corrugated packaging products business.
Greif's strategic transformation
The sale of the containerboard business is an important step in Greif's strategic transformation, aiming to focus its business more on polymer-based products. Greif CEO Ole Roosegaarde pointed out that the divestiture "represents a key step in our efforts to streamline our product portfolio, improve capital efficiency and advance our growth priorities."
In a conference call, Roosegaarde further elaborated on the reasons for selling the containerboard business. He said that Greve's strategic goal is to achieve industry leadership (first or second) in the business areas he chooses, but the containerboard business is far from this level and the company is unwilling to invest huge amounts of money in it.
Greif had previously announced a three-year, $100 million cost-cutting plan in December 2024, with the goal of achieving $1 billion in EBITDA by 2027. Recently, Greif has adjusted its business focus from the traditional two major areas of global industrial packaging and paper packaging and services to four material-based departments: customized polymers, durable metals, sustainable fibers and integrated solutions.
These adjustments allow Greif to focus more on high-growth end markets such as food and beverage, pharmaceuticals, flavors and fragrances, and agrochemicals. Roosegaarde emphasized: "This transaction is not only about the areas we exit, but also about our future development direction."
Graves Chief Financial Officer Larry Hirsheimer added that the transaction will provide the company with "significant financial flexibility," allowing it to pursue high-return organic capital expenditures and strategic M&A opportunities in targeted growth areas.
Greif's recent business adjustments
Before selling the containerboard business, Greve also made a series of adjustments to its business layout: at the beginning of this year, the company announced that it would permanently stop paper machine production in Georgia in the first quarter; permanently close a containerboard and uncoated recycled paperboard plant in Massachusetts in the second quarter; plan to sell 176,000 acres of forest land in the southeastern United States managed by its wholly-owned subsidiary Soterra; plan to close a coated and uncoated recycled paperboard plant in Los Angeles in June.
When announcing second-quarter results in early June, Greif provided the "low end" of 2025 guidance, projecting adjusted EBITDA of $725 million and adjusted free cash flow of $280 million. Company executives said on a recent conference call that updated guidance was not available at this time.
The transaction of American Packaging Company to acquire Graves' containerboard business for US$1.8 billion is an important decision made by both parties based on their respective strategic considerations. For American Packaging Company, this acquisition is undoubtedly a strategic move aimed at consolidating its market position and optimizing the layout of the industrial chain. By integrating Graves' containerboard production capacity, American Packaging Company will not only be able to enhance its internal supply capacity for corrugated packaging products, but also achieve considerable pre-tax profits in the next two years through economies of scale, efficiency improvements and cost synergies. This shows that American Packaging Company is committed to enhancing its core competitiveness through vertical integration and laying the foundation for continued growth in the future.
For Greve, the sale of the containerboard business is a key step in achieving strategic transformation and focusing on core high-growth businesses. Greve made it clear that the business is not the "first or second" position in its target market and is unwilling to make a large investment for it. This reflects Greve's determination to optimize its asset portfolio and improve capital efficiency. By divesting non-core businesses, Greve can invest more resources and energy in new material departments with higher growth potential and profitability (such as customized polymers, etc.), so as to better seize opportunities in high-growth terminal markets such as food and beverage and pharmaceuticals. At the same time, the cash from the sale will be used to repay debts, which significantly enhances the company's financial flexibility and provides sufficient financial support for its subsequent organic growth and strategic mergers and acquisitions in high-return areas.
Overall, this transaction reflects the trend of enterprises optimizing resource allocation and adjusting strategic direction through mergers and acquisitions and divestitures in a dynamic market environment. American Packaging achieved business expansion and synergy through acquisitions, while Greve further focused on its key areas of future growth by divesting non-core businesses. This transaction will not only reshape the competitive landscape of the US containerboard market, but also inject new impetus into Greve's long-term transformation and development.
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