Boise Inc. being acquired by Packaging Corp. in $2B deal

September 16, 2013 

This file photo shows Boise Inc.'s Nampa processing plant, which creates corrugated cardboard for custom boxing.

DARIN OSWALD Buy Photo

Packaging Corp. of America is buying Boise Inc. for about $1.27 billion, acquiring additional containerboard needed to support its growth.

Shareholders of Boise Inc., the Boise-based maker of packaging and paper products, are being offered a 26 percent premium to their stock price on Friday. Shares of the company jumped in premarket trading on Monday.

If the deal is completed, Packaging Corp.'s containerboard capacity will rise to 3.7 million tons from 2.6 million tons. Its corrugated products volume will increase about 30 percent. The company will also broaden its geographic reach to the Pacific Northwest.

Boise Inc. has about 5,400 employees nationwide, according to its website. It wasn't immediately clear what will happen to those employees as a result of the sale, though Packaging Corp. CEO Mark Kowlzan hinted at continued employment for Boise workers.

“This acquisition allows us to apply our operating and sales expertise across a much larger system and provides significant growth potential," Kowlzan said in a news release. "We look forward to working with the employees of Boise as we integrate our businesses. I am confident, that together, we will achieve significant operating benefits.”

Both companies' boards unanimously approved the acquisition, which is expected to close in the fourth quarter.

“PCA’s desire to acquire Boise is a testament to the performance delivered and dedication shown by our employees in our five years as a public company, and the value we have created in a very challenging economic environment," Boise CEO Alexander Toeldte said in the release. "We have been committed to serving our customers with distinction and this transaction will enhance opportunities for even stronger customer service."

Lake Forest, Ill.-based Packaging Corp. will pay $12.55 per share, a 26 percent premium to Boise's $9.96 closing price on Friday. Shares of Boise gained $2.53, or 25.4 percent, to $12.49 before the opening bell.

Packaging Corp.'s stock rose $5.95, or 10.9 percent, to $60.50 in premarket trading.

“Our Board and management team have thoroughly evaluated a broad range of strategic options for Boise, and we believe this transaction is the best way to maximize value for our shareholders,” Boise Inc. board chairman Carl Albert said.

The companies put the deal's total value at approximately $2 billion, which includes $714 million of Boise's outstanding debt.

Boise currently has about 100.9 million outstanding shares, according to FactSet.

The transaction is anticipated to immediately add to earnings.

A Packaging Corp. affiliate will start a tender offer to acquire Boise's stock. The tender offer must be started within 10 days and remain open for at least 20 business days after launch.

Boise Inc.'s brief history is tied to Boise Cascade Corp., an iconic Idaho company that fell on hard times more than a decade ago. Boise Cascade Corp. was publicly held until 2004, when it bought OfficeMax, assumed the OfficeMax name, and moved its headquarters to the Chicago area.

Office Max promptly sold most of its interest in the former Boise Cascade timberlands, paper-making business, and wood products and building materials distributions divisions to Madison Dearborn.

Madison Dearborn created Boise Cascade LLC, which soon sold off the timberlands. In 2008, the paper, packaging and newsprint operations were sold to a pair of investors who turned them into a publicly held company called Boise Inc.

Boise Cascade LLC shares part of the Boise Plaza building Downtown with Boise Inc. The building was the old Boise Cascade Corp. headquarters.

The Idaho Statesman contributed.

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