International Paper to Buy Temple-Inland

International paper (IP) have been given the go ahead for its $3.7 billion takeover of Temple Inland, providing it divests itself of three containerboard mills. The agreement which was made on Feb 10th 2012, in a federal court in Washington, states that IP needs to sell Temple-Inland mills in Tennessee and California, and an IP mill in Heuneme, California, within the next 6 months. The sale of these mills will reduce their overall containerboard output by 970,000 tons, or about 7% of the total capacity of the two companies, combined, and will leave them with 17 mills in total.

After the sale of the three mills, IP's market share will be around 34%, with a predicted $30 billion a year in sales and a projected income before taxes and interest of about $4.3 billion.

The deal is likely to be closed sooner rather than later - maybe as fast as this week. IP will pay Temple-Inland shareholders $32 for each of their 110 million shares of stock. The total cost of the deal is estimated at around $4.3 billion based on higher share count from exercised stock options and $600 million in assumed debt from Temple-Inland.

It has been reported tht IP Chairman and Chief Executive John Faraci stated "We are pleased to have reached an agreement with the DOJ that addresses their concerns and preserves the value in the combination of these two fine companies. As we take the final steps to closing, we look forward to a smooth integration and to realising the substantial benefits this transaction provides our customers, employees and shareholders.

Posted Date: 21st Feb 2012