International Paper completes major sale, acquisition deals in Asia and Europe

SPOKANE (Scrap Monster): Memphis, Tennessee-based forest products major-International Paper (IP) has announced completion of acquisition of Spanish newsprint mill and sale of its corrugated packaging business in China. The press statement release by the company states that it has acquired the Holmen Paper Madrid Mill in Spain and has finished sale of its Chinese business to Xiamen Bridge Hexing Equity Investment Partnership Enterprise.

Earlier in March this year, IP had entered into a definitive agreement with Xiamen Bridge Hexing Equity Investment Partnership Enterprise to sell its corrugated packaging business in China and Southeast Asia. Carl Roberts, CFO, IP had then stated that the slow and complicated market condition in China is the key reason for the sale of its business. The limited availability of materials had forced the company to sell 55% of equity interest in the IP-Sun joint venture during end-2015. The worth of the current deal is estimated at around $150 million. The deal covers 18 box plants in the region and approximately 3,000 employees working at these plants. According to IP spokesperson, the markets in China and Southeast Asia will remain supplied through Ilim joint venture in Russia and directly from the U.S.

In April 2016, IP had signed an agreement with forest industry group Holmen to buy Holmen’s newsprint mill in Madrid. Henrik Sjölund, Holmen CEO and President had then stated that the transaction is part of its ongoing efforts to focus on development of speciality paper strategy at its Swedish mills.

According to sources, IP will continue production of newsprint paper until the second half of next year. Towards the end of next year, the mill will be converted into containerboard. International Paper noted that the Spanish mill purchase will boost the growth of its corrugated packaging business in EMEA. The company’s total investment in the project is estimated at nearly Euro 150 million. The recycled board mill is expected to achieve a capacity of around 380,000 metric tons of finished products per annum, when fully operational.

The agreement also covers Holmen’s energy and recycled paper operations at the facility. The sale transaction also includes Holmen’s 50% shareholding in the energy producer Peninsular Cogeneración S.A. and the recycled paper collector Cartón y Papel Reciclado S.A. (Carpa). Carapa has three locations in Spain.

The purchase transaction is expected to deliver superior value for IP customers. The strategic acquisition is expected to help the company to grow its corrugated packaging business in EMEA. It is also expected to offer innovative, tailored and high performing packaging solutions to its customers.

It must be noted that IP, in a major acquisition deal, had announced purchase of the pulp business owned by Weyerhaeuser Co. in an all cash deal of $2.2 billion. The deal covers five pulps mills located in Columbus, Miss., Flint River, Ga., New Bern, N.C., Port Wentworth, Ga., and Grande Prairie, whose combined production capacity is estimated at nearly 1.9 million metric tons. In addition, the deal also includes two converting facilities in Columbus, and Gdansk, Poland.

International Paper is a global leader in the paper and packaging industry with manufacturing operations in North America, Europe, Latin America, Asia and North Africa. Headquartered in Memphis, Tenn., the company employs approximately 65,000 people and is strategically located in more than 24 countries serving customers worldwide. The company was recently ranked 37^th in the list of top 100 work environments for technology professionals by IDG's Computerworld.