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Graphic Packaging’s (GPK) PFP Buyout to Aid Packaging Unit

Zacks

Graphic Packaging Holding Company GPK yesterday announced that one of its completely-owned subsidiaries, Graphic Packaging International, LLC, has signed an agreement to acquire PFP, LLC along with PFP Dallas Converting, LLC. Financial consideration of the buyout has not been disclosed.

PFP — an independent converter — primarily engages in manufacturing air-filter frames (mainly paperboard-based). It operates two manufacturing facilities; one in Lancaster, TX and the other in Lebanon, TN. PFP was founded in 1999 and is headquartered in Tennessee.

Details of Buyout

As noted, in the last 12 months, PFP’s earnings before interest, tax, depreciation and amortization margin was solid. Moreover, its paperboard, mainly coated unbleached kraft paperboard (CUK), conversion totaled roughly 18 thousand tons.

Addition of PFP to the portfolio will drive Graphic Packaging Holding’s air-filter frame (paperboard-based) business. It will result in cost synergies and boost the company’s CUK paperboard tons.

This buyout will be integrated with Graphic Packaging Holding’s Americas Paperboard Packaging segment. In the first quarter of 2018, the company generated roughly 67.1% of its net sales from this segment. In the quarter, the segment’s sales grew 24.9% on a year-over-year basis.

Graphic Packaging Holding’s Inorganic Initiatives

The above-mentioned transaction is consistent with Graphic Packaging Holding’s policy of acquiring meaningful businesses to gain access to improve its product lines and market exposure. It’s worth mentioning here that the company started its air-filter frame (paperboard-based) business with the acquisition of Carton Craft Corporation and its related company Lithocraft, Inc in July 2017.

In addition to the above-mentioned buyouts, Graphic Packaging Holding combined its business with North America Consumer Packaging business of International Paper Company IP in January 2018. In December 2017, the company acquired folding-carton producer, Seydaco Packaging Corp. as well as its related companies; National Carton and Coating Co., and Groupe Ecco Boites Pliantes Ltée. Also, in October 2017, the company acquired Norgraft Packaging, S.A., a folding carton manufacturer.

Zacks Rank & Key Picks

With a market capitalization of nearly $4.6 billion, Graphic Packaging Holding currently carries a Zacks Rank #3 (Hold). In the last 60 days, earnings estimates for the stock for 2018 remained unchanged at 87 cents per share while increased roughly 2% to $1.03 for 2019.

Graphic Packaging Holding Company Price and Consensus

Graphic Packaging Holding Company Price and Consensus | Graphic Packaging Holding Company Quote

In the past month, the company’s shares have yielded 5% returns, outperforming the 1.5% growth recorded by the industry.



Some better-ranked stocks in the Zacks Industrial Products sector include Crown Holdings, Inc. CCK and Sonoco Products Company SON. While Crown Holdings sports a Zacks Rank #1 (Strong Buy), Sonoco Products carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, earnings estimates for each of these stocks improved for the current year and the next year. Also, average positive earnings surprise for the last four quarters has been 4.83% for Crown Holdings and 1.39% for Sonoco Products.

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