(Bloomberg) -- Suzano SA has agreed to acquire Pactiv Evergreen Inc.’s Pine Bluff mill in Arkansas for $110 million in cash as the Brazilian pulp-making giant seeks to tap into the US packaging sector.
The transaction, which also includes an extrusion facility in Waynesville, North Carolina, is expected to close in the fourth quarter, according to a statement confirming an earlier report by Bloomberg News.
The purchase of the Pine Bluff mill, which produces the packaging board used in paper cups, comes weeks after Suzano abandoned its pursuit of US paper giant International Paper Co. That transaction would have enabled Suzano, the world’s largest pulp producer, to expand internationally and diversify operations into the more stable packaging sector.
The deal with Pactiv, which is much smaller in size, can still create a base from which Suzano can expand “both organically and inorganically” in the US, said Suzano Chief Financial Officer Marcelo Feriozzi Bacci.
“Suzano has the intention to be relevant in the US market, and this can be a growth platform,” Bacci said in an interview.
The assets being acquired have the capacity to produce a total of 420,000 metric tons of paperboard a year, Suzano said in a filing.
Suzano shares fell as much as 1.8% after Bloomberg News reported that it was nearing a deal with Pactiv Evergreen, with the US company surging as much as 3.6% before trimming gains.
Lake Forest, Illinois-based Pactiv Evergreen has been exploring strategic alternatives for the Pine Bluff mill, and said in its latest 10-K that it hadn’t set a timetable for that process.
--With assistance from Gerson Freitas Jr..
(Updates with Suzano comment starting in fourth paragraph)
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