Greif to Acquire H.I.G.’s Caraustar

Greif to Acquire H.I.G.’s Caraustar

Publicly-traded Greif has agreed to acquire Caraustar Industries, a portfolio company of H.I.G. Capital, for $1.8 billion in cash.

Caraustar is one of North America’s largest integrated manufacturers and converters of 100% recycled paperboard and converted paperboard products. Caraustar serves end-use markets in tube and core, folding carton, gypsum facing paper and specialty paperboard products.

Caraustar has more than 80 operating facilities throughout the United States. The company, led by CEO Mike Patton, was founded in 1938 and is based in Austell, GA (

For the last twelve months ended September 30, 2018 Caraustar had sales of $1.4 billion and an EBITDA of $174 million. With a purchase price of $1.8 billion this equates to a TTM EBITDA valuation multiple of 10.3x. Greif has provided an Adjusted EBITDA (adjusted for current market conditions as of September 30, 2018) of $220 million which results in an Adjusted TTM EBITDA valuation multiple of 8.2x. Grief has also identified approximately $45 million of annual run-rate cost synergies that could be achieved within three years that would further increase the Adjusted TTM EBITDA to a proforma amount of $265 million.

“Caraustar offers an exceptional strategic and cultural fit for Greif,” said Greif’s President and Chief Executive Officer, Pete Watson. “Its complementary paper packaging and recycled fiber operations will drive significant free cash flow growth, improve balance and profitability within the Greif portfolio and increase Greif’s exposure to U.S. industrial and consumer end markets.”

Greif (NYSE: GEF) is a provider of industrial packaging products and services. The company produces steel, plastic and fiber drums, intermediate bulk containers, reconditioned containers, flexible products, containerboard and packaging accessories and provides filling, packaging and other services for a wide range of industries.

Greif has annual revenues of approximately $3.8 billion and operates from 200 facilities in more than 40 countries. Greif is headquartered north of Columbus in Delaware, OH (

H.I.G. acquired Caraustar in May 2013 from Wayzata Investment Partners which had acquired the company in 2009 through a pre-packaged chapter 11 process. H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing and service businesses. H.I.G. has more than $25 billion of capital under management. The firm is based in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, London, Hamburg, Madrid, Milan, Paris, Bogotá, Mexico City and Rio de Janeiro (

Rothschild & Co and Credit Suisse were the financial advisors to Caraustar on this transaction and Goldman Sachs & Co. advised Greif.

Wells Fargo Bank, Goldman Sachs Bank USA and JP Morgan Chase Bank have provided financing commitments for this transaction which is expected to close during the first quarter of 2019.

© 2018 Private Equity Professional | December 20, 2018

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