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RockTenn positioned to focus on containerboard value after Smurfit buy
By Jennifer Lanning Drey
Savannah, Ga., June 15 - RockTenn Co. is well positioned to focus on opportunities in its substantially larger containerboard business after its recent acquisition of Smurfit-Stone Container Corp., RockTenn chief executive officer James A. Rubright said during a Wednesday presentation at the Deutsche Bank Global Industrials and Basic Materials Conference in Chicago.
"The opportunity for us to create value over the next 24 to 36 months is really substantial," Rubright said.
RockTenn's acquisition of Smurfit-Stone nearly tripled the company's size, as well as provided RockTenn a larger position in North American containerboard, with ownership of 12 containerboard mills, he noted.
"Our view is the containerboard business is a great business that is going to be a much better business over the course of the next few years," he said.
The acquisition was completed on May 27 and is expected to generate synergies of $150 million within two years.
The deal was financed with half debt and half equity. The resulting debt ratio is roughly 2.8 times, leaving RockTenn in a good position to continue to invest in the business, Rubright said.
The CEO also highlighted that in past acquisitions, RockTenn has exceeded its synergy and debt-reduction targets.
In connection with the acquisition, RockTenn closed on $4.3 billion of debt financing, consisting of a $1.475 billion revolving credit facility, a $1.475 billion five-year term loan facility, a $750 million seven-year term loan facility and a $625 million accounts receivable facility, according to a May 27 news release.
RockTenn is a Norcross, Ga.-based cardboard packaging manufacturer.
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