US – American corrugated packaging company WestRock has signed an agreement to purchase the remaining interest in recycled paper and cardboard packaging manufacturer Grupo Gondi for US$970 million.
The transaction also includes the assumption of debt, representing an estimated implied enterprise value of US$1.76 billion. Currently, WestRock has a 32.3% stake in Grupo Gondi.
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.
David B. Sewell, Chief Executive Officer of WestRock said: “Acquiring the remaining interest in Grupo Gondi is the next strategic step in our broader North American paper and packaging expansion strategy.
“As onshoring continues to grow in the region, WestRock will be well positioned to meet this growing demand with fully integrated operations in Mexico. We will also have expanded capabilities to serve customers across many geographies, driving additional productivity and cost savings.”
The tuck-in acquisition will provide WestRock with further geographic and end market diversification as well as position the Company to continue to grow in the attractive Latin American market.
Grupo Gondi President and board chairman Alejandro González Cimadevilla said: “WestRock and Grupo Gondi have been great joint venture partners over the past six years, working together to provide outstanding service and innovation for our customers.
“Becoming part of WestRock, with its scale, geographic footprint and customer-focused solutions will further enhance our ability to provide complete packaging solutions for our customers.”
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.
Upon the completion of the deal, the Company would consolidate Grupo Gondi into its financial statements. WestRock has the ability to fund the purchase with existing liquidity.
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