WestRock Company to Acquire Grupo Gondi for $970 Million; David B. Sewell and Eduardo Posada Comment
ATLANTA, GA - Paper and packaging solutions provider WestRock Company is building out its operations. The company recently 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.
“Acquiring the remaining interest in Grupo Gondi is the next strategic step in our broader North American paper and packaging expansion strategy,” said David B. Sewell, Chief Executive Officer of WestRock. “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.”
Grupo Gondi operates four paper mills, nine corrugated packaging plants, and six high-graphic plants throughout Mexico. 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 Latin American market.
According to a press release, WestRock currently owns 32.3 percent of Grupo Gondi, and this transaction will secure the remaining 67.7 percent. 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.
“When we complete this transaction, Grupo Gondi will continue to excel as part of WestRock, said Eduardo Posada, Chief Executive Officer of Grupo Gondi. “I look forward to joining the WestRock team and serving our customers with the expanded capabilities and reach of WestRock.”
WestRock reportedly expects the transaction to achieve a return on invested capital greater than 10 percent by year three following the closing and for the company to remain within its targeted net leverage range of 1.75x to 2.25x debt to EBITDA.
The acquisition is expected to close by the end of the calendar year 2022, after which the company would consolidate Grupo Gondi into its financial statements.
To read the press release in full, please click here.
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