Pactiv Corp. said it would acquire the stock of Prairie Packaging Inc. for about $1 billion. The company expects to close the deal in the second quarter, subject to normal regulatory approvals and customary conditions.

Prairie expects to record full year sales of about $500 million, which represents a double-digit growth. Pactiv said this purchase would be modestly accretive to earnings per share and free cash flow in 2007 and would be significant in 2008.

Pactiv estimates that this transaction would be accretive for its 2007 earnings in the range of $0.02 to $0.04 per share, including estimated annualized synergies of $15 million. The transaction is expected to generate a return well in excess of Pactiv's cost of capital.

The purchase price represents about 7 times Prairie's projected EBITDA of $116 million, plus tax benefits related to the treatment of the transaction as an asset acquisition for tax purposes for 2007.

Prairie is a manufacturer of tableware and foodservice products, including drink cups, portion cups, containers, cutlery, plates, and bowls. Pactiv is a manufacturer of consumer and specialty-packaging products for the consumer and foodservice/food packaging markets.

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