International Paper acquires Temple-Inland for $4.3bn

International Paper has ended a takeover battle that has lasted more than three months by announcing that it has reached a “definitive merger agreement” to acquire Temple-Inland for $32 a share plus the assumption of $600 million in debt.


The boards of both companies came to an agreement after International Paper raised its previous, $30.60 per share offer, from back in early June. The new offer was about 5% higher to $32 a share, which implies a $3.7 billion cash payment plus the assumption of $600 million in debt, taking the total value of the transaction to $4.3bn.

Reaching an agreement was taken as a step forward by the market as shares in both companies soared. Hostilities emerged after initial negotiations broke down, with Temple-Inland’s board considering the offer too low and International Paper taking its bid directly to share-holders.

Temple-Inland’s board approved a shareholder rights plan or a so-called poison pill takeover defense prohibiting any person or group from owning more than 10% of the company.

According to the press statement, only published on International Paper’s website, the merger will yield expected synergies of about $300 million a year within 24 months of closing, “derived primarily from the areas of operations, freight, logistics, selling expense and overhead.”

‘Substantial benefits’

International Paper chairman and chief executive John Faraci said: “The strategic benefits of this combination are clear and we are pleased to be able to move forward on terms that are financially attractive for both sets of shareholders. Acquiring Temple-Inland enhances our ability to generate additional cash flow while maintaining our strong balance sheet.

“We look forward to working with the employees of Temple-Inland as we integrate our businesses and create an even stronger company with substantial benefits for our customers, employees and shareholders.”

Temple-Inland chairman and chief executive Doyle R. Simons added: “This transaction creates value for both Temple-Inland and International Paper shareholders. The combined company will be positioned to be a leader in providing high quality products for its customers.”

Media reports have suggested that the deal could raise International Paper’s share of the corrugated-packaging market to about 37%, from the current 27%.

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