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Greif, Inc.GEF has entered into an agreement to divest its Consumer Packaging Group ("CPG") unit to Graphic Packaging Holding Company GPK for cash proceeds of $85 million. Greif will be utilizing the fund for repayment of debt. The deal is likely to close by Mar 31, 2020 subject to customary closing conditions.
A part of Greif’s Paper Packaging division, the CPG business contains seven converting facilities across the United States that manufacture folding cartons for consumer packaged goods and produce annual revenues of more than $200 million.
The divesture enables Greif to deleverage its balance sheet and optimize capital allocation priorities, while focusing on core industrial franchise and strategic growth priorities in Intermediate Bulk Container production and containerboard integration.
The divesture is unlikely to impact the company’s fiscal 2020 outlook. Greif continues to expect $70 million synergies over the next 36 months from the closure of the Caraustar acquisition.
Recently, the company reported mixed first-quarter fiscal 2020 results, wherein earnings surpassed the Zacks Consensus Estimate, while sales missed the same. While the top line increased year over year, the bottom-line figure registered a decline.
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