IP International Paper Company

By Tess Stynes 

International Paper Co. agreed to acquire the fiber pulp operations of Weyerhaeuser Co.'s cellulose fibers unit for $2.2 billion, a move that is expected to complement the paper-and-packaging company's business.

International Paper said it expects to incur a $300 million tax benefit related to the deal. The company also said it expects annual cost savings of roughly $175 million by the end of 2018 that will result in one-time expenses of roughly $85 million.

Weyerhaeuser said it plans to use a substantial portion of the expected $1.6 billion of after-tax proceeds to repay loans related to its previously announced $2.5 billion stock buyback.

IP Chairman and Chief Executive Mark Sutton said the acquisition will position the packaging and paper company as the "premier global supplier" of fluff pulp, which is used in consumer goods such as diapers, other hygiene products, tissue and textiles.

Under the agreement, which is expected to close in the fourth quarter, IP will obtain five pulp mills and two converting operations that produce fluff pulp, softwood pulp and specialty pulp. Weyerhaeuser's pulp business has about 1,900 employees in the U.S., Canada and Poland.

Weyerhaeuser CEO Doyle R. Simons said the deal furthers its efforts to focus its business on timber, land and forest products.

Weyerhaeuser in November said it was exploring strategic alternatives for the cellulose fibers unit, which included five pulp mills, two modified fiber mills, one liquid packaging board facility, and one publishing papers joint-venture facility.

On Monday, Weyerhaeuser said the company is continuing its review of its liquid packaging board facility, as well as its newsprint and publishing papers joint-venture.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

May 02, 2016 09:09 ET (13:09 GMT)

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