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Packaging Corporation of America to purchase assets of Sacramento Container

Packaging Corporation of America (PCA) has agreed to purchase all assets of Sacramento Container and acquire 100% membership interests of Northern Sheets and Central California Sheets for $265m.

As per the agreement, PCA will take over full-line corrugated products and sheet feeder operations in McClellan and Kingsburg, California.

PCA will commence the conversion of 200,000 ton-per-year No. 3 paper machine to a 400,000 ton-per-year high-performance 100% virgin kraft linerboard machine in the second quarter of 2018 by aborting the manufacturing of uncoated freesheet (UFS) and coated one-side (C1S) grades at its Wallula plant in Washington.

The transaction, subject to regulatory approval and customary conditions, is cash-free and debt-free and will close in the fourth quarter of 2017.

In the second quarter of 2018, the conversion of the No. 3 paper machine at the Wallula mill will commence. In the fourth quarter of 2018, a new headbox, forming section, and shoe press will be added to increase to increase the production by 1150 tons a day.

The No. 2 paper machine will generate 150,000 tons-per-year of semi-chemical medium.

US-based containerboard and corrugated packaging products manufacturer PCA has eight mills and 93 corrugated products plants. The firm also produces uncoated freesheet paper.

PCA chairman and CEO Mark Kowlzan said: “Our strategy is to improve the overall profitability of the paper business for PCA by focusing our people and investments on increasing our competitiveness and ensuring a sustainable future in the office and printing & converting markets with our mills in International Falls, MN and Jackson, AL.

“In addition, at our current containerboard integration rate of 95%, the low-cost conversion of the No. 3 paper machine at our Wallula Mill provides us with much needed linerboard capacity, allows us to integrate over 200,000 tons of containerboard to our Sacramento Container acquisition, and enables further optimization and enhancement of our current mill capacity and box plant operations. The conversion will significantly enhance the mill’s profitability and viability.”