KapStone Paper and Packaging Corp. (NYSE:KS) has entered into an agreement where it will buy out Victory Packaging. The deal was estimated to be worth about $615 million.
KapStone plans to use the new acquisition to boost its assets, as well as its mills. This strategy will enhance the operating scope for the company. The company that is located in Northbrook Illinois reported that the deal will be worth at least $515 million once tax deductions have been calculated and excluded.
So far, the two are working on achieving various performance goals, upon which two conditional payments will be made. Both payments will add up to a total of $45 million which is expected to be complete within four years once the deal is finalized. The payments can be spread out within this period, making it easier for continued ease of management for both companies and without much influence on the cash flow.
Analysts expect the buyout to contribute to KapStone’s bottom line as soon as the transaction is complete. The company also announced on Tuesday that the deal will be a great tool for maintaining significantly reduced costs.
Roger W. Stone, who currently takes the position of the company’s Chief Executive and Chairman, reported that KapStonPe plans on pushing an additional 115,000 tons of corrugated produce in future operations. This amount will be an addition to the 370,000 tons that Victory already purchases on an annual basis. This strategy will make work easier for Victory as well as reducing costs. Additionally more output will be expected, thus resulting to more profits in the long run for both companies.
Victory Packaging is based in Houston, Texas. It has 65 distributions workshops that are spread out in various regions such as the United States, Canada, and Mexico. In 2014, the company reported annual sales amounting to $953 million.
KapStone Paper and Packaging Corp. (NYSE:KS) is supposed to reveal more information about the acquisition in the next press conference that will take place in a week’s time.