Shares of Packaging Corp. (PKG) jumped almost 13% in pre-market trading on Monday after the company announced that it will purchase a rival containerboard-maker.
Under the deal, which is expected to close during the fourth quarter, Packaging Corp. will pay $12.55 a share, or $1.27 billion, for Boise (BZ). That represents a 26% premium over the target’s last closing price, the Associated Press noted.
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Not surprisingly, shares of Boise surged about 26% in pre-market trading. The company has roughly 100.9 million shares outstanding.
The combined company will have a total containerboard production capacity of 3.7 million tons. The deal will also boost Packaging Corp.’s corrugated products manufacturing by around 30%.
Including $714 million in Boise debt, the total deal is worth about $2 billion.
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