IP buying Weyerhaeuser pulp mills in U.S., Canada, Poland
Federal Way WA
Weyerhaeuser Company has announced an agreement to sell its Cellulose Fibers pulp mills to International Paper for $2.2 billion in cash. Weyerhaeuser expects to use a substantial portion of the estimated $1.6 billion after-tax proceeds for repayment of term loans issued in conjunction with the company's previously announced $2.5 billion share repurchase program.
The transaction includes five pulp mills located in Columbus, Miss.; Flint River, Ga.; New Bern, N.C., Port Wentworth, Ga. and Grande Prairie, Alberta, with a combined total capacity of nearly 1.9 million metric tons. The sale also includes two modified fiber mills in Columbus, Miss. and Gdansk, Poland.
The announcement completes the first phase of the company's strategic review of the Cellulose Fibers business.
The transaction with International Paper does not include Weyerhaeuser's liquid packaging board facility or newsprint and publishing papers joint-venture. Weyerhaeuser's review of those assets is ongoing.
"This transaction delivers compelling value for Weyerhaeuser shareholders and further focuses our portfolio as we work to be the world's premier timber, land, and forest products company," said Doyle R. Simons, president and chief executive officer.
"I want to thank the employees of the Cellulose Fibers pulp mills for continuing to operate safely, and for delivering an exceptional customer experience throughout the strategic review process," said Simons. "Our mills are world class producers of pulp, and the assets and people are among the finest in the industry. This transaction will position the mills to achieve their full potential as part of an industry-leading pulp and paper manufacturer."
The transaction is subject to customary closing conditions including regulatory review and is expected to close in the fourth quarter of 2016. The Weyerhaeuser pulp business and International Paper will continue to operate separately until the transaction closes.
Morgan Stanley & Co. LLC acted as financial advisor to Weyerhaeuser in the transaction.
Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. The company owns or controls more than 13 million acres of timberlands, primarily in the U.S., and manage additional timberlands under long-term licenses in Canada. The company, a real estate investment trust, in February 2016, was merged with Plum Creek Timber Company, Inc. In 2015, Weyerhaeuser and Plum Creek, on a combined basis, generated approximately $8.5 billion in net sales and employed nearly 14 thousand people who serve customers worldwide.