International Paper has entered into a definitive agreement to purchase Weyerhaeuser's pulp business.
Under terms of the agreement, IP will acquire five pulp mills and two converting facilities that produce fluff pulp, softwood pulp, and specialty pulp for a number of consumer applications including diapers, other hygiene products, tissue, and textiles.
Because the transaction is a purchase of assets, International Paper expects to realize a tax benefit with an estimated net present value of approximately $300m. Including this benefit, the net price is approximately $1.9 billion. International Paper forecasts annual synergies of approximately $175 million by the end of 2018, which will require the need for one-time costs of approximately $85 million.
Weyerhaeuser's pulp business has approximately 1,900 employees throughout the USA, Canada and Poland. The combined business will provide the company flexibility to manage a wide portfolio of products to meet customer needs.
The acquisition is expected to close in the 4th quarter of 2016, subject to certain closing conditions, primarily the receipt of regulatory approval.