KapStone Paper is to acquire the stock of Longview Fibre Paper and Packaging from Brookfield Capital Partners II, a private equity fund managed by Brookfield Asset Management, in a cash free, debt free transaction for USD1.025bn in cash and subject to certain post-closing adjustments.
Closing of the acquisition is subject to a number of customary conditions, including regulatory review.
Longview is a manufacturer of high quality containerboard, lightweight high performance multiwall paper, specialty Kraft papers, and corrugated containers located in the Pacific Northwest region. Longview’s operations include a mill located in Longview, Washington equipped with five paper machines which produce 1.15 million tons of containerboard and Kraft paper annually. In 2012, Longview generated USD831m in net sales and USD118m of EBITDA. In the first quarter of 2013, Longview’s net sales were USD217m generating USD42m of EBITDA.
Roger W Stone, chairman and chief executive officer of KapStone, says: "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 one. 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 which is growing at about four per cent per year."
Randy Nebel, president of Longview, says: "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 has committed financing from Bank of America, Barclays Bank, and Wells Fargo Bank.
