KapStone Paper and Packaging Corporation
) recently announced that it has inked a definitive agreement to
acquire Longview Fibre Paper and Packaging, Inc. for $1.025
billion in cash. The strategic buy is aimed to increase
KapStone's presence in the containerboard market and strengthen
its liquidity with Longview Fibre's strong free cash flow.
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Located in Longview, WA, 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 accretive to KapStone with immediate effect
and is likely to transform it into a more profitable company with
expected synergies of approximately $10 million within the first
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, IL, 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 a
range of products, including containerboard, Kraft paper and
unbleached folding carton board products.
KapStone currently has a Zacks Rank #3 (Hold).) Other stocks in
the industry that look promising and are worth a look include
PH Glatfelter Co.
LyondellBasell Industries NV
), each carrying a Zacks Rank #2 (Buy).