International Paper, Graphic Packaging Combine Packaging Businesses

International Paper Co. said Tuesday that it had agreed to combine its North America consumer-packaging business with Graphic Packaging Holding Co. in a transaction valued at $1.8 billion.

Under the deal, International Paper will receive a 20.5% stake, valued at $1.14 billion, in the resulting consumer-packing business and use $660 million in cash proceeds from a loan being assumed by Graphic Packaging to pay down existing debt.

Shares of International Paper -- the Memphis, Tenn., paper company -- rose 1.1% to $58.90 in premarket trading, while shares of Graphic Packaging, an Atlanta producer of cartons and specialty packaging, climbed 4.1% to $14.85.

International Paper said the deal allows the company to benefit from Graphic Packaging's consumer-packing business, while helping IP to remain focused on its core businesses. The transaction is expected to close early next year.

Earlier this month, International Paper agreed to transfer $1.3 billion in pension liabilities to a unit of Prudential Financial Inc. in a maneuver used by companies with pension plans to limit their exposure to volatility in markets and interest rates. The move was expected to reduce International Paper's $14 billion in U.S. qualified pension plan liabilities by about 9%.

Write to Ezequiel Minaya at

(END) Dow Jones Newswires

October 24, 2017 08:34 ET (12:34 GMT)