The structure of the transaction will enable KapStone to realize a tax benefit that has an estimated net present value of approximately $100 million. Taking this benefit into account, the net purchase is about $515 million.
Chairman and CEO of KapStone, Roger W. Stone, stated, "Acquiring Victory will provide KapStone with growth based on Victory's impressive, profitable track record. The acquisition will allow KapStone to de-risk operations by providing a higher level of integration. Victory is a unique strategic fit that will simultaneously increases utilization of our converting assets and mills. Victory currently buys approximately 370,000 tons of corrugated products annually of which KapStone expects to supply an incremental 115,000 tons. Victory will still rely heavily on their current supplier base to fill the remainder. Conservatively estimated, these synergies are expected to reach $30 million of EBITDA in 24 months. The deal is accretive to our bottom-line from Day 1. Our balance sheet, which was strong going into this transaction, remains strong after the acquisition. The combined company is expected to deliver substantial free cash flow in the first year allowing KapStone to quickly de-lever."
KapStone has committed financing from Bank of America, Barclays Bank, and Wells Fargo Bank.
The transaction is expected to close in the 2Q 2015.
Victory Packaging is a large, national distributor of all types of packaging specializing in providing unique solutions for its clients.
KapStone Paper and Packaging Corporation is the fifth largest producer of containerboard and corrugated packaging products and is the largest kraft paper producer in the United States.
