KapStone to buy US Corrugated

26 September 2011 (Last Updated September 26th, 2011 03:30)

KapStone Paper and Packaging has agreed to buy US Corrugated in a deal worth $330m in order to increase its exposure to the containerboard market.

KapStone Paper and Packaging has agreed to buy US Corrugated in a deal worth $330m in order to increase its exposure to the containerboard market.

Under the contract, KapStone will acquire a 240,000t recycled containerboard paper mill in Cowpens, South Carolina, and 14 converting facilities in the eastern and mid-western US.

USC will sell another six facilities prior to closing.

KapStone chairman and CEO Roger Stone said the acquisition will increase the company's exposure on the market.

He added that because USC is a net purchaser of 195,000t of containboard, the risk of costly economic downtime will be mitigated throughout the economic cycle.

"Operating synergies are also expected to result in at least an additional $8m in profit improvement annually within the first 18 months," Stone said.

KapStone currently manufactures kraft paper products, linerboard.

Closing of the transaction is expected in late October but is subject to a number of customary conditions, including regulatory review and receipt of financing.