KapStone to Acquire Longview Fibre in $1.025 Billion Deal
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KapStone Paper and Packaging Corp., Northbrook, Ill., USA, will acquire the stock of Longview Fibre Paper and Packaging, Longview, Wash., from Brookfield Capital Partners II, a private equity fund managed by Brookfield Asset Management Inc. in a cash-free, debt-free transaction for $1.025 billion in cash and subject to certain post-closing adjustments. Closing of the acquisition, expected to occur this summer, is subject to a number of customary conditions, including regulatory review.
Longview is a producer of containerboard, lightweight high performance multiwall paper, specialty kraft papers, and corrugated containers, located in the U.S. Pacific Northwest region. Longview's operations include a mill in Longview, Wash., equipped with five paper machines that produce 1.15 million tons of containerboard and kraft paper annually. In 2012, Longview generated $831 million in net sales and $118 million of EBITDA. In the first quarter of 2013, Longview's net sales were $217 million, generating $42 million of EBITDA.
Chairman and CEO of KapStone, Roger W. Stone, said that "acquiring Longview is an outstanding opportunity for numerous reasons. The acquisition immediately adds value for our shareholders by increasing earnings and generating very strong free cash flow. The deal is accretive to our bottom-line from Day 1. Our balance sheet, which was strong going into this transaction, remains strong after the acquisition. The combined company is expected to deliver substantial free cash flow in the first year, allowing KapStone to quickly de-lever. This acquisition will increase our exposure to the highly desirable containerboard segment. It also broadens our kraft paper line and makes KapStone a global producer of high performance, extensible multiwall paper, a grade that is growing at about 4% per year."
Matt Kaplan, president and COO of KapStone, added that "we look forward to having the Longview team join KapStone. Their track record is very impressive and over the past several years, Longview has increased productivity, benefitted from increased demand for containerboard and extensible kraft paper, and experienced declining wood costs. We anticipate synergies of approximately $10 million within the first 18 months."
Hugh Sutcliffe, managing partner of Brookfield, noted that "I would like to thank all of the people at Longview who have contributed toward building a safe and successful business and I am confident that this success will continue with KapStone."
Randy Nebel, president of Longview, said that "we are excited to be part of the KapStone family. It's a great opportunity for our customers and employees. Our product lines complement each other and provide us with a national presence in corrugated containers. We thank Brookfield for the support they have given us."
KapStone Paper and Packaging Corp. is a producer of unbleached kraft paper and corrugated products. The company is the parent company of KapStone Kraft Paper Corp. and KapStone Container Corp., which includes three paper mills and 15 converting plants across the Eastern and Midwestern U.S. The company employs approximately 2,700 people.
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