WestRock Company has entered into an agreement to acquire the remaining interest in Grupo Gondi for $970 million, plus the assumption of debt, representing an estimated implied enterprise value of $1.763 billion.
Upon completion of this transaction, WestRock will further enhance its leading position in the growing Latin American containerboard, paperboard and consumer and corrugated packaging markets. Grupo Gondi operates four paper mills, nine corrugated packaging plants and six high graphic plants throughout Mexico, producing sustainable packaging for a wide range of end markets in the region. The tuck-in acquisition will provide WestRock further geographic and end market diversification as well as position the Company to continue to grow in the attractive Latin American market.
WestRock currently owns 32.3% of Grupo Gondi, and this transaction will secure the remaining 67.7%. This acquisition is expected to be immediately accretive to earnings, subject to purchase accounting adjustments. Grupo Gondi’s calendar year 2022 EBITDA is estimated to be approximately $200 to $210 million. WestRock expects to achieve an incremental $60 million in annual synergies by year three following the closing.
The transaction firmly aligns with WestRock’s capital allocation and acquisition framework, providing significant strategic and financial benefits. The Company expects the transaction to achieve a return on invested capital greater than 10% by year three following the closing and for WestRock to remain within its targeted net leverage range of 1.75x to 2.25x debt to EBITDA.
The acquisition, which is subject to a number of customary closing conditions, including approval by regulatory authorities in Mexico, is expected to close by the end of the calendar year 2022, after which the Company would consolidate Grupo Gondi into its financial statements. WestRock has the ability to fund the purchase with existing liquidity.
WestRock Company is a global manufacturer of differentiated paper and packaging solutions.
