It’s a lot of trees — and more — no matter how you look at the forest. On March 17, it was announced that Weyerhaeuser Company had entered into an agreement to sell its containerboard packaging and recycling (CBPR) business to International Paper for $6 billion in cash, subject to post-closing adjustments. With a tax benefit that has an estimated net present value of approximately $1.4 billion, the net purchase price is $4.6 billion.
The transaction includes nine containerboard mills, 72 packaging locations, 10 specialty-packaging plants, four kraft bag and sack locations and 19 recycling facilities in 31 states and Mexico. The deal would affect approximately 14,300 of Weyerhaeuser’s roughly 37,000 employees.
Three Mississippi operations are included in the transaction. They are Weyerhaeuser’s packaging operations in Olive Branch, Jackson and Magnolia. In total, more than 350 Mississippi workers are affected (Olive Branch, 130 employees; Jackson, approximately 122 employee; and, Magnolia, 100 employees).
How the transaction might affect there facilities and their workers is unknown now, but changes are definitely afoot.
Not a surprise
The announcement did not come as a big surprise to Weyerhaeuser’s affected workers, according to Jackie Walburn, Weyerhaeuser’s public affairs manager, Alabama and Mississippi. She says the workers were informed approximately 10 months ago that a strategic review was being conducted of the company’s CBPR business.
“Employees have been aware of the situation,” Walburn adds.
At press time, Walburn said that Weyerhaeuser was receiving calls from those in the CBPR operations, and the company was doing its best to answer all of their questions. However, some of those questions will not be answered until after the transaction’s anticipated closing date, which is the second half of this year, probably the third quarter, IP says.
IP says it has identified profit improvement opportunities of approximately $400 million annually from the acquisition. The company expects to achieve at least 40% of the improvement within 12 months of completing the deal, with the remainder fully realized by the end of the third year, as a result of reducing duplicate overhead costs, integrating manufacturing operations, optimizing product mix and improving operational and supply chain efficiencies.
IP’s senior communications manager for packaging Amy Sawyer says no decisions have been made yet on the Mississippi facilities and their workers. She says IP is currently working to integrate their systems, a critical element in IP assessing exactly what the Mississippi plants and workers offer. She did say, however, that IP knew Weyerhaeuser’s facilities to be well managed and maintained, and the company’s workers are solid. But it was too early to say what the future held for those facilities.
IP’s senior officers and senior management seem high on the Mississippi operations. IP chairman and CEO John Faraci says, “Integrating Weyerhaeuser’s CBPR business into our North American packaging platform fits very well with our strategy to improve our earnings, cash flow and returns by strengthening existing businesses.”
“Weyerhaeuser has low-cost, well-run assets that complement our existing mill and converting system and offer significant synergies,” says Carol Roberts, senior vice president of IP’s packaging business. She adds, “The acquisition expands our geographic presence in the U.S. and Mexico and diversifies our customer base in key product lines. All of this will make our packaging business more competitive, more profitable and better able to serve customers.”
Weyerhaeuser may be selling its CBPR operations in Mississippi, but it is far from exiting the state.
The Federal Way, Wash.-based company will continue to own and operate facilities at Columbus Cellulose Fiber (400 workers), Columbus Modified Fiber (95 workers), Bruce iLevel Lumber Technologies (200 workers), Philadelphia iLevel Lumber Technologies (210 workers), McComb iLevel Lumber Technologies (200 workers) and Long Beach/Gulfport iLevel Service Center (approximately 20 workers).
In addition, Weyerhaeuser would continue to manage approximately 778,000 acres of Mississippi timberland (the Mississippi-Alabama Timberlands Region is headquartered in Columbus with offices at Bellefontaine and Scooba, and the Mississippi-Louisiana Timberlands Region is headquartered in McComb with offices at Hillsdale and Columbia). Its Southern Timberlands Research Center is also located in Columbus, and Weyerhaeuser’s Real Estate Development Company operates in the Mississippi-Louisiana Timberlands Region.
Contact MBJ staff writer Wally Northway at email@example.com.