Clearwater Paper to Acquire Cellu-Tissue for $502 Million

SEpt. 16, 2010 - Clearwater Paper today announced it has agreed to acquire Cellu Tissue Holdings, Inc., an Alpharetta, Georgia-based (USA) integrated manufacturer of tissue products for approximately $502 million, including equity value of approximately $247 million and net debt of approximately $255 million.

Clearwater will pay $12.00 per share in cash for Cellu Tissue’s outstanding common stock and intends to fund the acquisition using a combination of existing cash on hand and $350 million of debt financing.

Clearwater has secured a financing commitment for the deal from BofA Merrill Lynch.

Clearwater believes the acquisition will be immediately accretive to earnings per share before taking into account an estimated $15-$20 million in net annual cost synergies expected by the end of 2012.

The acquisition has been unanimously approved by both companies’ boards of directors and is expected to close in the fourth quarter of 2010, following Cellu Tissue stockholder approval, regulatory clearances, and other customary closing conditions.

Weston Presidio and Russell Taylor, Cellu Tissue’s CEO, which together own approximately 56% of Cellu Tissue’s common stock outstanding, have agreed to vote their shares in favor of the deal. “We are very pleased to have the opportunity to rapidly expand our tissue manufacturing footprint through the acquisition of Cellu Tissue and create a combined company with much stronger operational scale to better serve private label tissue customers," said said Gordon Jones, Clearwater's chairman, president and CEO.

"This acquisition, coupled with the previously announced construction of our new tissue machine and converting facilities in Shelby, North Carolina, is expected to provide both short and long-term value to our shareholders,” Jones said.

“Clearwater Paper already has a national sales footprint, and this acquisition gives us a rare opportunity to immediately have a national manufacturing presence to increase service to our existing private label grocery customers and expand into new private label channels,” Jones added.

Clearwtaer expects to achieve the following strategic and financial benefits as a result of the deal:

  • Opportunity for Clearwater Paper to establish a national manufacturing presence as a papermaker and converter of tissue products
  • Customer growth with existing and new customers
  • Increased Through-Air-Dried (TAD) capacity
  • Logistical improvements through shipping and transportation synergies
  • Combined company annual revenues expected to be approximately $1.9 billion
  • Immediate accretion to earnings per share before synergies
  • Expected annual net cost synergies of $15-$20 million by the end of 2012

In connection with the acquisition of Cellu Tissue, Clearwater Paper intends to tender for or defease Cellu Tissue’s outstanding 11.50% senior secured notes due 2014.

SOURCE: Clearwater Paper Corp.