Wausau Paper has signed a definitive agreement to sell its speciality paper business to a new KPS Capital Partners-sponsored company Expera Specialty Solutions in a deal worth $110m.
The US-based private equity firm has also signed an agreement to acquire Packaging Dynamics' speciality paper business, Thilmany, which operates paper mills in De Pere and Kaukauna, Wisconsin, US.
According to Wausau Paper, the Thilmany business will be combined by Expera with Wausau's speciality paper business to create a speciality paper products manufacturer for the food packaging, industrial, and pressure-sensitive release liner segments in North America.
Post acquisition, the assets of Wausau Paper's Rhinelander and Mosinee mills will be acquired by Expera.
Wausau Paper, which did not include its Brainerd mill assets in the sale, will retain defined benefit pension and other post-retirement benefit obligations; however about $41m of future liability will be eliminated, effective with the closing of the deal.
The US-based company will not hold any equity ownership in Expera, and will receive a contingent payment that will be equal to what the holder of a 5% equity interest in Expera would receive if certain performance thresholds and KPS liquidity events occur.
Wausau Paper president and CEO Hank Newell said: "This transaction accomplishes all of our key objectives: divesting our paper business in a way that creates value for our shareholders, creating a specialty business under new ownership with the scale and product breadth to compete globally, and narrowing our focus to accelerating growth in our tissue business."
The transaction has received required regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act.
Sale of the Wausau Paper to Expera is also conditioned upon Expera completing the acquisition of the Thilmany business.
Image: KPS Capital signed an agreement to acquire Thilmany, the specialty paper business of Packaging Dynamics