The American company entered into an agreement to acquire the remaining stake in Grupo Gondi for $970 million plus the assumption of the group’s debt obligations. As a result, the total cost of the acquisition makes approximately $1.76 billion. The transaction to be completed by the end of 2022
“Grupo Gondi operates four paper mills, nine corrugated packaging plants and six high graphic plants throughout Mexico. When we complete this transaction, we will continue to excel as part of WestRock,” said Eduardo Posada, CEO of Grupo Gondi. “I look forward to joining the WestRock team and serving our customers with the expanded capabilities and reach of WestRock.”
Two years ago, the Grupo Gondi Cuautipack plant in Cuautitlán (Mexico City) set a world record with a 2.5m Fosber S/Line corrugator, producing 308,919 sqm of corrugated cardboard for an 8-hour shift.
The tuck-in acquisition will provide WestRock further geographic and end market diversification as well as position the company to continue to grow in the attractive Latin American market.
“Acquiring the remaining interest in Grupo Gondi is the next strategic step in our broader North American paper and packaging expansion strategy,” said David B. Sewell, chief executive officer of WestRock.
“As onshoring continues to grow in the region, WestRock will be well positioned to meet this growing demand with fully integrated operations in Mexico. We will also have expanded capabilities to serve customers across many geographies, driving additional productivity and cost savings.”
“WestRock and Grupo Gondi have been great joint venture partners over the past six years, working together to provide outstanding service and innovation for our customers,” said Alejandro González Cimadevilla, Grupo Gondi’s president and chairman of the board.
“Becoming part of WestRock, with its scale, geographic footprint, and customer-focused solutions, will further enhance our ability to provide complete packaging solutions for our customers.”
WestRock currently owns 32.3% of Grupo Gondi. The gorup’s 2022 EBITDA is estimated to be approximately $200 to $210 million. WestRock expects to achieve an incremental $60 million in annual synergies by year three following the closing.
Also WestRock expects the transaction to achieve a return on invested capital greater than 10% by year three following the closing and for WestRock to remain within its targeted net leverage range of 1.75x to 2.25x debt to EBITDA.