International Paper to Sell Brazilian Coated Papers Business
Aug. 22, 2006 - International Paper has signed a definitive agreement to sell its Brazilian coated papers business to Stora Enso Oyj for approximately $415 million, subject to certain post-closing adjustments.
The business includes a coated paper mill and lumber mill in Arapoti, Parana State, Brazil, as well as 50,000 hectares (approximately 124,000 acres) of forestland in Parana. (These assets were formerly owned by Inpacel — Industria de Papel Arapoti Ltda. and Inpacel Agroflorestal Ltda., subsidiaries of International Paper.)
"The business and, more importantly, its employees have been an important part of International Paper in Brazil, and I am confident they will be an excellent addition to Stora Enso," said John Faraci, IP chairman and chief executive. "International Paper's ongoing operations in Brazil remain an important base for the company, and the region remains an area of growth for us as we explore opportunities to strengthen our uncoated papers and packaging businesses there."
Jukka Härmälä, CEO of Stora Enso, said the acquisition of IP's coated papers business in Brazil supports his company's strategy for new growth markets.
"The strategic aim of this acquisition is to strengthen our presence in the Latin American market through paper production in Brazil. This will firmly establish our publication paper business in Latin America and expand it into new markets," said Härmälä.
"With this acquisition we will become the sole producer of coated mechanical paper in Latin America," he added.
IP noted that the deal is part of its previously announced transformation plan to focus on uncoated papers and industrial and consumer packaging globally. Including this sale, expected proceeds from transformation-related divestitures announced to date are approximately $9.7 billion.
The Brazilian coated papers business had sales of approximately $230 million in 2005. It produces approximately 200,000 metric tonnes of coated paper for catalog, magazine and retail insert markets, and approximately 83 million board feet of lumber each year. Included among the 50,000 hectares of forestlands are 25,000 hectares of pine plantation and 5,000 hectares of eucalyptus plantation. The business employs more than 700 people.
The deal is expected to close in the third quarter of 2006 subject to customary closing conditions.
SOURCE: International Paper and Stora Enso