International Paper to Buy Weyerhaeuser's Fiber Pulp Operations for $2.2 Billion
May 02 2016 - 9:30AM
Dow Jones News
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 09:15 ET (13:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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