KapStone Paper and Packaging Corporation
) has moved a step closer to acquire Longview Fibre Paper and
Packaging, Inc., as the U.S. Federal Trade Commission (FTC)
reduced the customary waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (HSR Act). However, the
all-cash $1.025 billion acquisition now awaits the Federal Energy
Regulatory Commission's approval and is expected to close in the
The HSR Act provides the FTC and the Department of Justice (DOJ)
with relevant information about planned mergers and acquisitions.
The information is provided to enquire about possible antitrust
violations in order to propagate free and fair competitive
practices. Under the Act, the parties are liable to wait before
they can consummate the deal till the waiting period outlined in
the HSR Act has passed, or the government has granted early
termination of the waiting period.
KapStone had inked a definitive agreement last month to acquire
Longview Fibre to increase its presence in the containerboard
market and strengthen its liquidity with strong free cash flow of
Located in Longview, Wash., in close proximity to several sea
ports and with easy access to inter-state highways, Longview
Fibre is a premier manufacturer of high quality containerboard,
specialty Kraft papers and corrugated containers. Its facilities
include a network of corrugated container plants in four Western
states and a mill in Longview, which produces 1.15 million tons
of containerboard and Kraft paper annually.
Manufacturing over 70 grades of Kraft paper and containerboard,
Longview Fibre recorded net sales of $831 million in 2012, with
an EBITDA of $118 million. Over the past several years, Longview
Fibre has diligently increased its productivity with superior
execution of its operating plans and benefiting largely from
increased demand for containerboard and extensible Kraft paper.
The acquisition is likely to be accretive to KapStone with
immediate effect and is expected to transform it into a more
profitable company with projected synergies of approximately $10
million within the first 18 months.
On the other hand, Longview Fibre anticipates leveraging
KapStone's expertise and global presence to better serve its own
customers. In addition to a complementary product line, the
merger also facilitates Longview Fibre to have a considerable
presence in the corrugated container market in the U.S.
Founded in 2005 and headquartered in Northbrook, Ill, KapStone is
a leading producer of unbleached Kraft paper and corrugated
products. It is the parent company of KapStone Kraft Paper
Corporation and KapStone Container Corporation, and operates
three paper mills and 15 converting plants across the U.S. The
company, which has a market cap of roughly $1.7 billion, offers
products ranging from containerboard and Kraft paper to
unbleached folding carton board products.
KapStone currently has a Zacks Rank #1 (Strong Buy).) Other
stocks in the industry that look promising and are worth a look
Fibria Celulose SA
), each carrying a Zacks Rank #2 (Buy).
FIBRIA CELULOSE (FBR): Free Stock Analysis
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KAPSTONE PAPER (KS): Free Stock Analysis
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