US corrugated producers agree merger

USA – North America’s leading corrugated packaging producer has signed an agreement to take over the region’s third-largest player. Tennessee-based International Paper Co. will buy Temple-Inland Inc. of Austin, Texas, in a deal valued at US$ 4.3 billion.

International Paper made its first bid in June this year but the offer of US$ 30.60 per share was rejected by the Temple-Inland board. The new deal includes an offer to pay a price of US$ 32 per share, while International Paper will also assume US$ 600 million of Temple-Inland’s year-end debt.

‘We improved the offer a little less than 5%,’ explains International Paper’s CEO John Faraci. ‘We think that still is a very compelling return. In a way it sounds a little bit odd, but the tougher the economy gets the more strategic and important opportunities like this are at the right price.’ He does not expect box demand to return to pre-recession levels until 2015.

In addition to being subject to a vote by Temple-Inland stockholders, the deal will also be reviewed by the US Justice Department in keeping with anti-trust regulations. Mr Faraci hopes to have the latter’s approval by the end of the year and to close on the deal in the first quarter of 2012.