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Another Packaging Deal Gets Boxed Up

Plus: McGraw Hill IPOs and EQT Sells Pioneer.

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Good morning! Blackstone raised $5 billion for its latest infrastructure secondaries fund (30% larger than its predecessor). It’s also a big day for your kombucha-drinking friend who thinks he’s better than you: Health-Ade Kombucha is being acquired by Generous Brands for $500 million.

And in AI deal land, CapVest-backed Datasite picked up finance automation startup Blueflame AI.

Your favorite author has a wedding coming up, but don’t worry, I will still keep you updated with all of the deals. The only thing I say “I do” to is more staffings.

So here are the top 3 deals to keep you satisfied while I get my life in order:

  1. Packing Corp of America Acquires Greif Containerboard for $1.8 billion.

  2. CarUX acquires Pioneer from EQT for $1.1 billion.

  3. McGraw Hill has a disappointing IPO.

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DEAL OF THE MONTH

Packaging Corp of America Has No Greif

A couple of weeks ago we had over $40 billion of deals announced, but the summer slowdown is here, and Europe has logged off until 2026, so deal flow is a little slower this time around.

That being said, you can always count on some random industrials company to keep me in business. Their slides may be visual assault, but their cash flow is very green.

This week’s industrial deal? Packaging Corporation of America acquiring Greif Containerboard for $1.8 billion, or ~8.5x LTM EBITDA. 

(Told you their slides were ugly)

Quick background:

  • PCA is one of the largest producers of containerboard and corrugated packaging in the U.S. You’ve probably touched one of their boxes today without knowing it.

  • Greif, headquartered in Ohio, is a global leader in industrial packaging, think steel drums, plastic containers, fiber tubes. This deal is just for their containerboard division, a smaller piece of the empire.

As part of the deal, PCA is acquiring two containerboard mills, the CorrChoice Sheet Feeder, Corrugated Products Business and a Sheet Plant in North Carolina. See below:

The transaction is expected to yield $60 million of synergies within two years, mostly cost synergies and right sizing, though it looks like they are primarily operational rather than overhead reduction.

The deal is going to be funded with a new debt facility. This, as we know, is typically cause for some concern with shareholders, especially since this will cause the net leverage ratio of PCA to effectively double to 1.7x.

PCA’s share price has ripped though, jumping 10% over the month as a result of the transaction announcement and implying that investors are not worried about the extra debt burden.

This deal isn’t the most interesting, it isn’t even in the top 5 most interesting deals I’ve written about this month, but it is these kinds of deals that keep bankers employed.

How many times have you slaved away on a pitch deck thinking the deal is for some no name company that will never go anywhere?

Well, BofA is laughing all the way to the bank because your MD thought this deal was beneath him.

Remember, there’s no Lucite for the second-place pitch.

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INTERNATIONAL DEAL OF THE MONTH

CarUX Joins a Wave of Pioneers

Japan is so hot right now (literally… it just recorded its hottest summer ever.) But also everyone you know is vacationing there, Elon just dropped an anime girl on Grok, and a Japanese company bought US Steel.

Now, a Japanese company is the target of a $1.1 billion takeover.

Taiwan-based CarUX has agreed to acquire Pioneer from EQT for just over $1.1 billion.

While details of the transformation are sparse, it sounds like EQT cut costs, changed the management team, and significantly boosted cash generation (which is exactly what I would say when I sold a company).

In classic 2025 fashion, Pioneer also announced an AI product prior to its sale, which probably added a few turns to the multiple.

EQT acquired Pioneer in 2019 for ~$710 million. There is no indication for the amount of leverage used for the deal, so it is hard to guess the MOIC, but it is at least ~1.5x.

EQT has been working on this sale for 1.5 years (process was announced December 2023), but the original floated price was $1.5 billion.

Given the length of the process and the reduced sales price, it seems like this deal may have fallen victim to the age old mantra “time kills all deals.” 

IPO OF THE MONTH

McGraw Hill Fails to Educate the Market

The IPO market has been struggling recently, which has been a burden for PE firms looking for exits as well as private companies looking to raise capital.

McGraw Hill looked like it could be the one to reverse it. It is a relatively stable business with consistent revenues, and growing EBITDA margins.

Interestingly though, pricing did not quite work out as expected. The range sounded to the street was $19 - $22 per share, but the IPO priced at $17 per share, well below the initial range.

The biggest concern on the Street? AI disruption. Investors are skeptical about how long a traditional education publisher can fend off ChatGPT and friends, and honestly, fair.

The valuation also feels pretty fair, with a $3.2 billion market cap and $2.4 billion of debt, the shares are trading at around 11-12x earnings with a ~3x debt / EBITDA ratio.

It’s unclear what this will do to the IPO markets. If you ask me, a big IPO pricing below the range may cause the IPO markets to continue lagging, but let me crack open my textbooks to check…

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