Nippon Paper Agrees to Buy Australia Paper

Feb. 16, 2009 - Nippon Paper said that it has agreed to acquire Australia Paper (AP) from PaperlinX Ltd. for AUD 600 million (USD 391 million), and pay up to AUD 100 million (USD 65 million) in subsequent payments dependent upon its performance from 2010 to 2012.

The deal includes two out of four Australian mills operated by PaperlinX—the Maryvale mill and the Shoalhaven mill.

The Maryvale mill has an annual capacity to produce 500,000 tons of pulp, along with 260,000 tons of uncoated paper, 225,000 tons of linerboard, and 85,000 tons of Kraft paper.

The Shoalhaven mill produces 16,000 tpy of specialty paper (colored paper, security paper).

PaperlinX will keep its two remaining mills in Tasmania, which will be incorporated into a newly established subsidiary.

Nippon said that it expects the acquisition to dramatically improve its position in the Australian paper market through this acquisition.

“We believe AP will immediately contribute to the Group and optimize our production systems globally. AP will also be able to improve considerably its production efficiency, and establish the corporate structure suitable to compete with imported paper. We will concentrate on prompt realization of these synergic effects,” Nippon said in a press statement.

According to Reuters, PaperlinX has been aggressively looking to cut debt, and put Australian Paper up for sale last year.

The acquisition price is a sharp discount to the A$1.1 billion value attached to it on PaperlinX's books, Reuters reported.

SOURCE: Nippon Paper, Reuters

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