RockTenn will acquire Simpson Tacoma Kraft Paper Mill for approximately $343m, which is part of Simpson Lumber Company in Tacoma, Washington, US.
The mill produced 465,000 tons on two paper machines and two pulp dryers that made paper grades including containerboard, specialty kraft paper and pulp in 2013.
Wood chip supply contract
Jim Porter, president, corrugated packaging, RockTenn, said the mill operates a 55MW green biomass fuel cogeneration facility completed in 2009 and sells electricity under a long-term contract.
"We look forward to working with the entire Simpson team to build on the relationships they have developed over the years with the Tacoma Kraft Mill's customers," he said.
RockTenn will invest $60m in the mill over the next three years and has entered into a seven-year wood chip supply contract with Simpson Lumber Company.
FoodProductionDaily.com reported in July last year RockTenn predicted a bright future driven by pricing initiatives and operational efficiency as corrugated and consumer packaging sales grew in Q3.
It’s total net sales saw $2.4bn for the third quarter of the fiscal year 2013 increased $145m compared to Q3 of fiscal 2012. A segment income of $274m increased $115m or 72% over the prior year quarter.
Its restructuring, operating losses and transition costs due to plant closures for Q3 fiscal 2013 consisted of $22m of pre-tax facility closure charges and $2m of pre-tax acquisition and integration costs.
The pre-tax facility closure charges related to corrugated converting facilities in the Smurfit-Stone acquisition.
Steve Voorhees, CEO, RockTenn said Tacoma Kraft Mill is a great strategic fit for the company.
He added having a West Coast mill will improve relations with its customers in that region and operating efficiencies as a whole.
The purchase price reflects an EBITDA multiple of less than six times based on the mill's financial results for the 12 months ending December 2013 and the expected operating efficiencies, primarily due to the location of the mill on the West Coast. The transaction is structured as an asset purchase.
The transaction is subject to customary closing conditions and regulatory approvals.
FoodProductionDaily.com has contacted RockTenn for further comment.