Suzano acquires packaging mills from Pactiv Evergreen in multi-million deal

16 Jul 2024 --- Pactiv Evergreen has signed a definitive agreement to sell two of its mills to global paper and pulp producer Suzano for US$110 million in cash, subject to customary adjustments for closing amounts such as working capital. The sale includes the Pine Bluff paper mill in Arkansas and the Waynesville extrusion facility in North Carolina. 

Pine Bluff produces liquid packaging board and cupstock used to make fresh beverage cartons, paper cups and other fiber-based F&B packaging. Waynesville provides incremental extrusion capacity for the board produced at Pine Bluff. 

Pactiv Evergreen and Suzano have also agreed to enter into a long-term supply arrangement at the closing of the transaction pursuant to which Suzano would use Pine Bluff and Waynesville to supply liquid packaging board to Pactiv Evergreen’s converting business.

Fabio Almeida, executive vice president of Paper and Packaging at Suzano, says: “This acquisition is in line with our strategy. We are entering the North American market as a competitive producer of paperboard, taking on quality assets that are strategically well-located from an operational and logistical perspective, and opening new opportunities for growth.”

Michael King, Pactiv Evergreen’s president and CEO, adds: “The sale of Pine Bluff and Waynesville concludes the strategic alternatives review process.”

“This transaction is consistent with our disciplined focus on value creation, and we expect it to reduce the capital intensity of our business, improve our cash flow profile and further strengthen our balance sheet.”

“We put considerable thought into positioning Pine Bluff and Waynesville for the future and believe this agreement serves the best interests of our stakeholders and our local communities,” says King.

Transaction details 
Suzano has agreed to offer employment to current employees at Pine Bluff and Waynesville.

The transaction is anticipated to close in the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including foreign antitrust approval. 

Based on the transaction’s estimated cash proceeds, the company currently expects to record a non-cash impairment charge of approximately US$320 million–US$340 million in the third quarter of 2024.

The company expects to provide updated guidance for the fiscal year 2024, reflecting changes in management’s assumptions resulting from signing the agreement concurrent with its second-quarter earnings.

UBS Investment Bank is serving as Pactiv Evergreen’s financial advisor, and Debevoise & Plimpton is serving as its legal advisor.

Meanwhile, Suzano recently withdrew from its attempt to acquire International Paper (IP), as IP rejected its offer of US$15 billion as too little and Suzano was unwilling to rebid. The fall through brings IP’s merger with DS Smith back into the picture, for which shares shot up last week following the announcement.