KapStone Paper and Packaging Corporation and Longview Fibre Paper and Packaging, Inc. jointly announced that they have signed an agreement for KapStone to acquire the stock of Longview Fibre Paper and Packaging, Inc. 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 is subject to a number of customary conditions, including regulatory review.
Longview is a leading 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, WA equipped with five paper machines which 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 Chief Executive Officer of KapStone, Roger W. Stone, stated, "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 which is growing at about 4% per year."
