NEW YORK Beverage carton maker Graphic Packaging Corp. (GPK.N) said on Tuesday it would buy privately held Altivity Packaging LLC, which makes folding cartons, for $750 million.
Graphic Packaging shares rose 71 cents, or 14.5 percent, to $5.60 in afternoon trading on the New York Stock Exchange.
Graphic Packaging shareholders will own 60 percent of a new company and investors in Altivity, which is backed by private equity firm TPG Capital, will own the rest.
The deal, expected to close in the fourth quarter, will add to Graphic Packaging's earnings per share and free cash flow by 2008, the company said in a statement.
Graphic Packaging, which has about 201 million shares outstanding, will issue 134 million new shares to Altivity. Based on Graphic Packaging's recent share price of $5.60, that values Altivity at $750 million.
Including assumed debt of about $1.1 billion, and based on the average of $4.92 per share that Graphic Packaging traded at during the 30 days prior to July 5, the deal initially was worth $1.75 billion, Graphic Packaging said.
(Reporting by Caroline Humer in New York and Dilipp S. Nag in Bangalore)