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Packaging Corp. to buy Boise for $1.28 billion

Steve Rabin | E+ | Getty Images

Packaging Corp. of America said it would acquire smaller rival Boise for about $1.28 billion to increase its container board capacity.

Packaging Corp.'s offer of $12.55 per share represents a premium of 26 percent to Boise's Friday close.

Boise shares were trading at $12.53 before the bell. Packaging Corp. shares jumped 10 percent to $60.03.

(Read more: M&A setto surge following Vodafone's bumper deal)

Packaging Corp., the fourth-largest maker of containerboard and corrugated packaging products in the United States, said it would assume Boise's $714 million debt.

The deal, expected to add to earnings immediately, will increase Packaging Corp's containerboard capacity by 42 percent to 3.7 million tonnes (1 tonne = 1.102 metric tons).

The company also said the acquisition will boost its presence in the Pacific Northwest.

Packaging Corp was advised by Bank of America/Merrill Lynch while JPMorgan Securities advised Boise.

Including debt, the deal is valued at about $2 billion.

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