- August 19, 2004, pffc-online.com
CHICAGO, IL, USA—Packaging Dynamics Corp. reports it has entered into a definitive agreement to acquire Papercon, Inc. The transaction is valued at approximately $68.4 million (USD).
Headquartered in Atlanta, GA, USA, Papercon is a manufacturer and marketer of a broad range of paper- and foil-based specialty packaging products for foodservice, supermarket, quick-service restaurant, and food-processor customers. The company also has manufacturing facilities near Dallas, TX, and Los Angeles, CA, USA. During 2003, Papercon had net sales of approximately $85 million, states Packaging Dynamics Corp.'s release about the pending acquisition.
Packaging Dynamics Corp.'s chairman Frank V. Tannura states:
Ajram seems to be pleased with Papercon's pending acquisition by Packaging Dynamics. “We’re very excited about joining Packaging Dynamics,” states Ajram. “We believe that Packaging Dynamics has the resources and commitment necessary to support Papercon’s growth strategy, which is based on our long-standing philosophy of service, quality, and flexibility. The Papercon team and production facilities will remain in place and continue to focus on delivering innovative, creative, and timely solutions to our customers. I look forward to our new association with Packaging Dynamics as I have a great deal of respect for what they have accomplished over the past several years.”
According to Packaging Dynamics Corp.'s (PDC) release:
Following the transaction closing, Gaby Ajram will remain President of Papercon and will join the executive management team of Packaging Dynamics. It is also anticipated that Mr. Ajram will be appointed to the Packaging Dynamics board of directors after the transaction closing.
Packaging Dynamics has reached an agreement with its lenders to amend its existing credit facility in order to finance the cash requirements of the transaction and ongoing corporate needs. The amendment will provide for an incremental $45 million tranche B term loan which will mature with the existing tranche B term loan in September 2009 and a $10 million expansion of the revolving credit facility to a total of $50 million.
The transaction is subject to customary closing conditions for a transaction of this type and is expected to close by the end of the third quarter 2004.
Adds Tannura, “We expect the addition of Papercon to contribute in excess of $90 million (US) of net sales and approximately $10 million of EBITDA (approximately $7.0 million of income from operations plus approximately $3.0 million of depreciation and amortization) during the first year following closing. We expect the acquisition to be accretive to earnings per diluted share from continuing operations in fiscal 2005 and neutral to our target of $1.00 to $1.05 in 2004."
Learn more about Packaging Dynamics at pkdy.com.