NEW YORK ( TheStreet) -- Packaging Corp. of America (PCA) (PKG - Get Report) is buying packaging specialist Boise (BZ - Get Report) in a deal worth almost $1.3 billion, pushing shares of both companies up in premarket trading on Monday.
Boise shares climbed 26.71% to $12.62 on news of the deal, which is expected to close in the fourth quarter. Shares of PCA rose 11.9% to $61.04.
PCA will pay $12.55 a share in cash for Boise's outstanding common shares. The total transaction value is $1.995 billion, although this includes $714 million of outstanding Boise debt.
"The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies," said PCA Executive Chairman Paul Stecko, in a statement. "It provides the containerboard that PCA needs to support our strong corrugated products growth."PCA said that its containerboard capacity under the deal will increase to 3.7 million tons from the current level of 2.6 million. The acquisition will increase PCA's corrugated products volume by about 30%, it added, and expand the company's market presence into the Pacific Northwest --Written by James Rogers in New York. Follow @jamesjrogers >Contact by Email.