International Paper to acquire Temple-Inland in US$4.3bn deal
The announcement brings to an end wrangling over a price for Temple-Inland stretching back three months.
Temple-Inland had dismissed IP’s initial offer in July as “grossly” undervaluing the company and accused it of trying to take advantage of the recession to “grab Temple-Inland at a bargain price”.
However, the definitive merger agreement was reached after IP increased its original cash offer per share by $1.40 to $32.
The Memphis-based company confirmed the buyout had been approved by the boards of both companies in a move that will see it acquire all of Temple-Inland’s common outstanding stock and $600m debt.
The takeover is expected to be completed in the first quarter of 2012 and IP forecasted the new asset would begin to add profits to its balance sheet within a year.
Corrugated expansion
The acquisition of Texas-based Temple-Inland, which also manufactures building products, will significantly increase IP’s corrugated operations.
IP estimated the merger would yield synergies of approximately $300m annually within 24 months of closing, thanks mainly to areas of operations, freight, logistics, selling expenses and overheads.
"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,” said IP chairman and CEO John Faraci. “Acquiring Temple-Inland enhances our ability to generate additional cash flow while maintaining our strong balance sheet.”
A global player in packaging and paper, IP has operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include uncoated papers and industrial and consumer packaging. The firm employs about 59,500 people in more than 24 countries. It said 2010 net sales were more than $25 billion.
Temple-Inland produces corrugated packaging and building products. The fully integrated corrugated packaging operation consists of seven mills and 59 converting facilities.
