Clearwater Paper Corp. to Acquire Cellu Tissue Holdings

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As analyzed in the From the Experts section of this issue, Tissue and paperboard maker Clearwater Paper Corp. is acquiring Cellu Tissue Holdings, Inc., an Alpharetta, Ga., USA, producer of tissue products. Clearwater, of Spokane, Wash., USA, will acquire all of Cellu Tissue’s outstanding common stock and pay stockholders $12 per share. Clearwater will pay for the acquisition with cash and $350 million of debt financing.

Cellu Tissue is valued at roughly $502 million, including equity value of approximately $247 million and about $255 million of debt. The merger is expected to be completed by the end of 2010.

Cellu Tissue’s private label and specialty tissue businesses fit in well with Clearwater Paper’s existing private label tissue and pulp and paperboard businesses. Clearwater makes premium consumer tissue, bleached paperboard, and wood products. The company’s private label tissue is supplied to major retail grocery chains and its bleached paperboard is used by printers and packaging converters.
Clearwater leaders expect to be able to better serve private label tissue customers and expand into new private label channels as a result of the acquisition.

The merger is expected to create increased Through-Air-Dried (TAD) capacity and logistical improvements through shipping and transportation synergies. Combined company annual revenues are estimated at $1.9 billion.