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International Paper offloads three containerboard mills under DOJ agreement

By Joe Whitworth , 04-Jun-2012
Last updated on 04-Jun-2012 at 13:31 GMT2012-06-04T13:31:26Z

International Paper sell three mills after Temple-Inland takeover

International Paper (IP) has sold the three containerboard mills under the terms of its agreement with the US Department of Justice (DOJ) for US$470m in order to proceed with its takeover of Temple-Inland earlier this year.

The firm had to sell the sites under a 950,000 ton divestiture agreement related to competition concerns after the $4.3bn (€3bn) takeover of Temple-Inland, which was completed in February.

The DOJ said in February that by combining the containerboard capacity of the merger would “significantly expand the volume of containerboard over which International Paper would benefit from a price increase, and likely would have led International Paper to strategically reduce its output of containerboard in order to increase the market price.”

IP sold its own mill in Oxnard (Hueneme), California and the former Temple-Inland mill in Ontario, California to New-Indy Containerboard, a newly formed joint company of The Kraft Group and Schwarz Partners.

It sold the former Temple-Inland New Johnsonville, Tennessee mill to Hood Companies.

All cash deal

Tom Ryan, senior manager of public relations, executive and employee communications at International Paper, told the all-cash deal will be used to pay down debt.

We are pleased to have reached these agreements within the timeline established in our settlement with the DOJ.

“We are the established leading global supplier in paper and packaging and we like the portfolio that we currently have.”

The DOJ added that the merger would have “substantially lessened competition in the production and sale of containerboard…in the United States.

The merger, as originally proposed, would have produced a single firm in control of approximately 37% of North American containerboard capacity,” it added. 

Each divestiture is subject to DOJ’s antitrust division approval, and must be closed within the timeframe outlined by the settlement agreement.

Ryan added: “Outside of what we have already stated publically, we are not going to comment any further on the process as it relates to the department of Justice.”

New owners

The Kraft Group and Schwarz Partners said: "We have been working together in the paper and packaging industry for decades and we have never been more optimistic about the direction of the industry than we are currently.”

Hood Companies Inc. said: "The mill represents a key strategic growth platform within Hood's holdings.  We view the New Johnsonville mill as an exceptional asset with an outstanding management team and employee group.” 

Last month, Amy J. Sawyer, senior communication manager of industrial packaging business at International Paper, told this site the company will close four container plants by the end of June due to the merger with Temple-Inland creating overcapacity within the system”.

When asked how this was going, Ryan added: "The combination of the newly acquired (Temple Inland) and legacy (IP) container plants created overcapacity in some areas as compared with our customer needs.

“To operate our business most effectively, we have to make difficult choices about which facilities are best able to support our customer needs now and in the future."

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