International Paper gets green light to buy Temple-Inland
Packagingnews.co.uk - Feb 14th 2012, 10:08
Paper giant International Paper has announced that it has won US antitrust approval for its $3.7 billion takeover of Temple-Inland, on condition that it sells three containerboard mills.
The settlement agreement filed last Friday (10 February) in a federal court in Washington requires International Paper to sell Temple-Inland mills in Tennessee and California, and an IP mill in Hueneme, California.
The sale of the mills will trim 970,000 tons of containerboard production capacity, or about 7% of the total capacity of the combined companies. International Paper will have four to six months to sell the plants.
Containerboard is used to make corrugated cardboard boxes. The Justice Department demanded the sales to maintain a competitive market in a consolidating industry for corrugated packaging.
Texas-based Temple-Inland is the fourth-largest producer of industrial packaging in North America with a 10% share of the market. Memphis-based International Paper is the market leader with a 27% share of the North American market.
Following the sale of the three mills, International Paper’s market share is projected at 34%.
International Paper said the agreement with the Justice Department will allow the purchase of Texas-based Temple Inland to close as soon as this week.
International Paper will pay Temple shareholders $32 for each of their approximately 110 million shares of stock. The company values the total cost of the deal at $4.3 billion based on higher share count from exercised stock options and $600 million in assumed debt from Temple.
‘Two fine companies’
IP chairman and chief executive John Faraci said: “We are pleased to have reached an agreement with the DOJ that addresses their concerns and preserves the value in the combination of these two fine companies.
“As we take the final steps to closing, we look forward to a smooth integration and to realising the substantial benefits this transaction provides our customers, employees and shareholders.”
The combined companies will have 17 mills. With Temple, IP expects to generate about $30 billion a year in sales with projected income before taxes and interest of about $4.3 billion
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