Temple-Inland Acquired by International Paper for $4.3bn

International Paper’s takeover battle, that has lasted over three months, has finally ended with an announcement that it has reached a “definitive merger agreement” to acquire Temple-Inland for $32 a share plus the assumption of $600 million in debt.

International Paper increased its previous, $30.60 per share offer, from back in early June, to $32 a share, which implies a $3.7 billion cash payment plus the assumption of $600 million in debt, taking the total value of the transaction to $4.3bn.

Initial negotiations had broken down when Temple-Inland’s board considered the offer too low and International Paper took its bid directly to share-holders. This agreement has been taken well by the market, as shares in both companies soared.

Temple-Inland’s board approved a shareholder rights plan,  prohibiting any person or group from owning more than 10% of the company.

According to the press statement on International Paper’s website, the merger will yield expected synergies of about $300m a year within 2 years of closing, “derived primarily from the areas of operations, freight, logistics, selling expense and overhead.”

‘Substantial benefits’

International Paper chairman and chief exec John Faraci said: “The strategic benefits of this combination are clear and we are pleased to be able to move forward on terms that are financially attractive for both sets of shareholders. Acquiring Temple-Inland enhances our ability to generate additional cash flow while maintaining our strong balance sheet.

“We look forward to working with the employees of Temple-Inland as we integrate our businesses and create an even stronger company with substantial benefits for our customers, employees and shareholders.”

Temple-Inland chairman and chief exec Doyle R. Simons added: “This transaction creates value for both Temple-Inland and International Paper shareholders. The combined company will be positioned to be a leader in providing high quality products for its customers.”

This deal could raise International Paper’s share of the corrugated-packaging market from 27% to about 37%.

Posted Date: 07th Sep 2011