Smurfit-Stone container to acquire St. Laurent Paperboard for 1.19 times revenue

The Deal: The Smurfit-Stone Container Corp., North America's largest manufacturer of paperboard packaging, will buy St. Laurent Paperboard, Inc. for nearly $1 billion in cash and stock. According to the terms of the transaction, St. Laurent's shareholders will get $12.50 in cash and one-half Smurfit-Stone

Discussion: St. Laurent Paperboard makes the linerboard, foodboard, and corrugated sheets used in packaging and other paper products. Its four paperboard mills and 16 packaging plants process raw materials into corrugated containers, retail packaging, point-of-purchase displays, specialty packaging and liquid packaging products that often feature colorful graphics. Other products include milk containers, paper cups and wood chips. Although based in Canada, the U.S. became St. Laurent's major market after the company bought assets from Chesapeake Corporation.

The Smurfit-Stone Container Corp. was formed by the 1998 mega-merger of Jefferson Smurfit and Stone Container. The company is focusing on mutual core operations such as corrugated containers, industrial bags, containerboard, folding cartons and recycled paperboard. The debt-laden company is divesting about $2.5 billion worth of noncore operations, including Stone's publications paper and market pulp businesses and has reduced its stake in AbitibiConsolidated, North America's largest newsprint producer.