IP, Temple-Inland deal receives Antitrust approval
Global paper and packaging company International Paper (IP) has received approval from the Antitrust Division of the US Department of Justice (DOJ) to take over Temple-Inland in a deal worth $3.7bn.
As part of the agreement, IP has agreed to divest its Hueneme, California facility and Temple-Inland's production units in Ontario, California and New Johnsonville, Tennessee.
The consent decree gives IP four months to sell the mills, with the possibility of two 30-day extensions.
IP has named its mill in Henderson, Kentucky, as an alternative to divesting the Hueneme unit, which recycles used corrugated boxes to make new containerboard.
The combined containerboard production capacity of these units must be about 950,000t and without the asset sales, the takeover would have given IP the ability to reduce output and increase US prices of the paper used to make corrugated boxes.
The DOJ said that the combined company would have had control of 37% of the North American capacity for containerboard, which is used to make corrugated boxes, making IP the largest producer in the US.
Memphis-headquartered IP hopes to achieve at least $300m of synergies within twenty-four months of closing.
IP chairman and CEO John Faraci said that as the company takes the final steps to closing, it looks forward to a smooth integration and to realising the substantial benefits the transaction provides.
The department's approval comes roughly seven months after IP first offered $3.3bn for Temple-Inland, which was turned down by stakeholders.
In September, IP raised the offer by 5% to $3.7bn and eventually gained approval.
IP has manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa, and its businesses include uncoated papers and industrial and consumer packaging.