International Paper finalises acquisition of Weyerhaeuser's Cellulose Fibers business

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International Paper expects annual synergies of approximately $175m by the end of 2018; puts one-time costs at $85m.

International Paper (IP) and Weyerhaeuser have finalised the announced purchase and sale agreement for Weyerhaeuser's Cellulose Fibers division. The deal worth  $2.2bn in cash is said to strengthen IP's position in the global fluff pulp market.

The transaction covers five pulp North American pulp mills with a total capacity of 1.9 million metric t of speciality, fluff and paper pulp, as well as two modified fibres plants in the USA and in Gdansk, Poland. The business offers pulp products for a number of consumer applications including diapers and other hygiene products, tissue and textiles.

IP will merge the Weyerhaeuser's Cellulose Fibers division with its own pulp business. The combined businesses will be called Global cellulose Fibers and reported as business segment beginning with the fourth quarter 2016 ernings release. The company expects annual synergies of approximately $175m by the end of 2018, "which would require one-time costs of approximately $85m," IP said.

"The sale of our pulp mills delivers compelling value for our shareholders and represents a significant milestone on our journey to focus our portfolio and become the world's premier timber, land, and forest products company," said Doyle R. Simons, president and chief executive officer of Weyerhaeuser. " The company explained it would use a substantial portion of the $1.6 billion after-tax proceeds for repayment of debt.

In October, the European Commission (EC) has given its approval for International Paper’s takeover of Weyerhaeuser’s pulp business. The EC said there were no grounds for objection against the merger because strong competitors exist on the market and the world’s fluff pulp production capacity is growing.

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