Nippon Paper completes acquisition of Weyerhaeuser’s liquid packaging board business

SPOKANE (Scrap Monster): Weyerhaeuser Company has announced that it has completed the sale of its liquid packaging board business to Nippon Paper Industries Co., Ltd for $285 million in cash. Both the companies had signed the sale agreement in June this year.

According to Weyerhaeuser press release, the sold liquid packaging board business consists of one mill located in Longview, Washington, with an annual capacity of 280,000 tons. The transaction is part of the strategic review process on its Cellulose Fibers business, which initiated during November last year. The deal covers production, processing, and sale of base paper for paper containers of liquid including soft drink and milk, and base paper for cup containers, etc. The deal would mean a cash inflow of approximately $225 million after tax. The company plans to use substantial part of the proceeds to repay outstanding debts.

The acquisition of the liquid packaging board business is expected to enable Nippon Paper to establish an integrated production system from base paper to processing and to provide further added value to customers as a total system supplier. The transaction will provide the company with new manufacturing and marketing bases in North America. It may also help the company to expand the sales in Asian markets and capture an opportunity to expand its business base in North America. Nippon Paper noted that the transaction would enhance the competitiveness of its existing business and support the company’s efforts to strengthen and expand its packaging business portfolio.

Doyle R. Simons, president and chief executive officer, Nippon Paper Industries noted that the transaction would further boost the company’s efforts to become the world's premier timber, land, and forest products company. Weyerhaeuser’s high quality products will further strengthen the company’s existing product portfolio. The acquisition will also bring on board a well-regarded and experienced employee team that has played a key role in Weyerhaeuser’s success over the past several years.

Recently, Weyerhaeuser Company had announced its plans to shutdown of its lumber and plywood mills in Columbia Falls, Montana after nearly seventy years of operation. The company had cited short supply of logs as the key reason for the closure of the mills. According to them, log supplies failed to witness significant improvement, despite sincere efforts by Montana political leadership. The full closure is expected to lead to 72 job losses. The closure will also impact dependent companies and loggers who work on Weyerhaeuser-owned land.

In May 2016, Weyerhaeuser had also announced plans to sell its pulp mills to International Paper Co. According to sources, the US Department of Justice has already concluded the regulatory review on the proposed transaction. The deal is expected to be completed during last quarter of this year. The deal covers five pulps mills located in Columbus, Miss., Flint River, Ga., New Bern, N.C., Port Wentworth, Ga., and Grande Prairie.

Weyerhaeuser is one of the world's largest private owners of timberlands. It owns or controls more than 6 million acres of timberlands, primarily in the U.S., and manages another 14 million acres under long-term licenses in Canada. Nippon Paper Industries Co., Ltd is a Japanese paper manufacturing company.