International Paper Agrees to Purchase Weyerhaeuser's Packaging Business
Creates premier global containerboard business with expanded mill and converting presence in key geographies
IP Investor Webcast at 8:30 a.m. Eastern Time
MEMPHIS, Tenn., March 17 -- International Paper (NYSE:IP) has signed an agreement with Weyerhaeuser to purchase its Containerboard, Packaging and Recycling (CBPR) business for $6 billion in cash, subject to post-closing adjustments. International Paper expects to close the deal in the third quarter of 2008, subject to customary closing conditions, including regulatory review and receipt of financing.
Because the transaction is a purchase of assets rather than of stock, International Paper will realize a tax benefit that has an estimated net present value of approximately $1.4 billion. Taking this benefit into account, the net purchase price is about $4.6 billion.
"This deal represents a compelling opportunity for International Paper and our shareowners at a very attractive valuation," said Chairman and Chief Executive Officer John Faraci. "Integrating Weyerhaeuser's CBPR business into our North American packaging platform fits very well with our strategy to improve our earnings, cash flow and returns by strengthening existing businesses. We expect the combined packaging business will generate stronger cash flow and higher EBITDA margins than either standalone business."
Carol Roberts, senior vice president of International Paper's packaging business, said she sees low integration risk and considerable upside potential in the deal. "Weyerhaeuser has low-cost, well-run assets that complement our existing mill and converting system and offer significant synergies," she said. "The acquisition expands our geographic presence in the U.S. and Mexico and diversifies our customer base in key product lines. All of this will make our packaging business more competitive, more profitable and better able to serve customers."
International Paper has identified profit improvement opportunities of about $400 million annually from the acquisition. The company expects to achieve at least 40 percent of the improvement within 12 months of completing the deal, with the remainder fully realized by the end of the third year, as a result of reducing duplicate overhead costs, integrating manufacturing operations, optimizing product mix, and improving operational and supply chain efficiencies.
The company projects that the acquisition will be earnings accretive for the 2009 full year. International Paper will finance the transaction through debt and has financing commitments from several leading financial institutions.
Investor Webcast
The company will hold a webcast to review earnings at 8:30 a.m. Eastern Daylight Time / 7:30 a.m. Central Daylight Time today. All interested parties are invited to listen to the webcast live via the company's Internet site at www.internationalpaper.com/ by clicking on the Investors tab and going to the Presentations page. A replay of the webcast will also be available on the Web site beginning at noon today. Parties who wish to participate in the webcast via teleconference may dial (706) 902-0234 or, within the U.S. only, (877) 237-8815 and reference conference ID number 39812343. Participants should call in no later than 8:15 a.m. EDT/7:15 CDT. An audio-only replay will be available for four weeks following the call. To access the replay, dial (706) 645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for the conference ID, enter "39812343."
About International Paper
International Paper (NYSE:IP) is a global paper and packaging company with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include uncoated papers and industrial and consumer packaging, complemented by xpedx, the company's North American distribution company. Headquartered in Memphis, Tenn., the company employs more than 50,000 people in more than 20 countries and serves customers worldwide. 2007 net sales were approximately $22 billion. For more information about International Paper, its products and stewardship efforts, visit internationalpaper.com.
FCMN Contact: amy.sawyer@ipaper.com
Source: International Paper
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Web site: www.internationalpaper.com/
