Government agreement moves Graphic Packaging, Altivity merger closer to completion

By Lisa Kerner

Charlotte, N.C., March 5 - The Department of Justice is requiring Graphic Packaging Corp. and Altivity Packaging, LLC to divest of two paperboard mills before proceeding with their proposed $1.75 billion merger.

The mills are located in Pennsylvania and Indiana, with an alternate mill located in California.

If approved, the proposed settlement should resolve the civil suit filed by the Department of Justice's Antitrust Division in the U.S. District Court in Washington, D.C., attempting to block the transaction.

According to the Department of Justice, the original merger proposal would have resulted in a single company responsible for 42% of the sale and production of coated recycled boxboard (CRB) in North America.

"The proposed merger would have created incentives for the combined company to reduce CRB production capacity or output, which would result in increased CRB prices," Thomas O. Barnett, assistant attorney general in charge of the Antitrust Division, said in a government news release.

"The divestitures will remove such incentives and preserve competitive conditions in the CRB market," Barnett added.

It was previously reported that under the companies' definitive agreement, each existing share of Graphic Packaging common stock will be converted into a share of common stock in the new company. Affiliates of TPG Capital, the majority owner of Altivity, along with the management owners of the company, will contribute all of their equity interests in Altivity's holding company to the new company in exchange for shares of the new company's common stock.

Graphic Packaging is a paperboard packaging solutions provider located in Marietta, Ga.

Chicago-based Altivity is a privately held producer of folding cartons.

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