International Paper To Buy Weyerhaeuser's Pulp Business For $2.2 Bln

(RTTNews) - Paper and packaging company International Paper Co. (IP) said it has agreed to purchase Weyerhaeuser Co.'s (WY) pulp business for $2.2 billion. The transaction is expected to close in the fourth quarter of 2016.

Under terms of the deal, International Paper will acquire five pulp mills and two converting facilities that produce fluff pulp, softwood pulp, and specialty pulp for a number of consumer applications including diapers, other hygiene products, tissue, and textiles.

Weyerhaeuser's pulp business has about 1,900 employees throughout the U.S. (Mississippi, Georgia, North Carolina), Canada and Poland.

International Paper expects to realize a tax benefit with an estimated net present value of about $300 million, as the transaction is a purchase of assets. Including this benefit, the net price is about $1.9 billion.

International Paper forecasts annual synergies of about $1755 million by the end of 2018, which will require the need for one-time costs of approximately $85 million.

International Paper Chairman and CEO Mark Sutton said, "This transaction will position us as the premier global supplier of fluff pulp and will enhance our ability to generate additional free cash flow."

In a separate statement, Weyerhaeuser said it 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. Weyerhaeuser is a private owner of timberlands