IP to Acquire T-I for $32 per Share in Cash
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International Paper Co. (Memphis, Tenn., USA) and Temple-Inland Inc. (Austin, Texas) yesterday announced that they have agreed to merge. The transaction has been approved by the boards of both companies, and is expected to close in the first quarter of 2012. According to the agreement, IP will acquire all of the outstanding common stock of T-I for $32.00 per share in cash, plus the assumption of $600 million in T-I's year end debt. The total transaction value is approximately $4.3 billion,
IP will terminate its existing tender offer to acquire all of the outstanding common shares of T-I for $30.60 per share, and T-I will hold a special meeting of its stockholders to vote on the transaction. In addition to the approval of T-I's stockholders, the transaction is subject to customary closing conditions, including antitrust approvals.
The combination is expected to yield synergies of approximately $300 million annually within 24 months of closing, derived primarily from the areas of operations, freight, logistics, selling expense, and overhead. The companies have a shared focus on low-cost mills, complementary converting systems, and high levels of box integration. IP notes that T-I's products and manufacturing facilities are an excellent strategic fit with its current offerings and facilities.
IP Chairman and CEO John Faraci said that "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. Acquiring Temple-Inland enhances our ability to generate additional cash flow while maintaining our strong balance sheet. We look forward to working with the employees of Temple-Inland as we integrate our businesses and create an even stronger company with substantial benefits for our customers, employees and shareholders."
Temple-Inland Chairman and CEO Doyle R. Simons added that "this transaction creates value for both Temple-Inland and International Paper shareholders. The combined company will be positioned to be a leader in providing high quality products for its customers."
IP has manufacturing operations in North America, Europe, Latin America, Russia, Asia, and North Africa. Its businesses include uncoated papers and industrial and consumer packaging, as well as xpedx, the company's North American distribution company. The company employs about 59,500 people in more than 24 countries. Its 2010 net sales were more than $25 billion. T-I is focused on corrugated packaging and building products. Its fully integrated corrugated packaging operation consists of 7 mills and 59 converting facilities. The building products operation manufactures a diverse line of building products for new home construction, commercial, and repair and remodeling markets.
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