Dive Brief:

• Graphic Packaging International completed its acquisition of Bell Inc. on Sept. 8 for $262.5 million, according to a Monday financial filing.
• Bell operates three converting facilities: two in South Dakota and one in Ohio. Graphic previously estimated the Bell acquisition would add $200 million in sales and yield $10 million in synergies.
• Bell consumes an estimated 95,000 tons of paperboard per year at those facilities to convert into folding cartons, mailers and related products.

Dive Insight:

This transaction, which was previously expected to close in Q4, is seen as complementary for Graphic on multiple fronts. In addition to offering an expansion into the mailer category, it also overlaps with Graphic’s recent investments to expand coated recycled board (CRB) capacity.

Bell was founded in 1920 as Bell Paper Box with a focus on packaging for local retail and confectionary markets in the South Dakota area. It was purchased by the late Mark Graham in 1976 and expanded significantly under the Graham family’s leadership. Bell has operated its current South Dakota facilities since the 1980s, and opened its Ohio facility in 2016. The company describes itself as “one of the largest independent folding carton companies in North America.” Its key markets include food packaging, food service packaging, consumer packaging and mailers.

During Graphic’s Q2 earnings, CEO Mike Doss said that Bell provides packaging to “a host of household names” and also has a “substantial presence” in the fiber-based mailer category. This includes a longstanding supply relationship with the U.S. Postal Service and the courier industry. Efforts by major retailers such as Walmart and Amazon to shift away from plastic-based mailer options are another sign of possible growth opportunities.

Graphic has described the Bell acquisition as a way to advance its “Vision 2025” goals related to increasing sales, profitability, paperboard integration and other metrics.

Related to that goal, Graphic recently invested in a new CRB machine at its facility in Kalamazoo, Michigan, and is investing $1 billion to construct a large CRB mill in Waco, Texas. Doss said that because the “vast majority” of Bell’s feedstock is CRB the deal “really fits well into our investments in Kalamazoo and Waco.”

As part of that broader CRB investment, Graphic has also moved to close smaller facilities to reduce costs. A recent example was the June closure of a CRB mill in Iowa that Graphic purchased from Greif for $100 million in January.

Doss also said the Bell deal will help push the company’s paperboard integration rate to “well over 80%” and make progress toward a goal of 90%. The 2018 purchase of consumer packaging assets from International Paper was another major development that increased integration rates.

Bell’s operations will now be included in Graphic’s America’s Paperboard Packaging segment, which reported more than $3.1 billion in sales through the first half of this year. Graphic previously estimated it could hit $10 billion in overall sales for 2023, excluding any contributions from Bell.