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Clearwater Paper to Acquire Cellu Tissue Holdings, Inc.
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Spokane, Washington, USA, 16 September 2010 -- (BUSINESS WIRE) -- Clearwater Paper Corporation (NYSE: CLW - News) today announced it has agreed to acquire Cellu Tissue Holdings, Inc., (NYSE: CLU - News), an integrated manufacturer of tissue products based in Alpharetta, Georgia,  for approximately USD 502 million, including equity value of approximately USD 247 million and net debt of approximately USD 255 million. Clearwater Paper will pay USD 12.00 per share in cash for Cellu Tissue’s outstanding common stock and intends to fund the acquisition using a combination of existing cash on hand and USD 350 million of debt financing. Clearwater Paper has secured a financing commitment for the transaction from BofA Merrill Lynch.

Clearwater Paper believes the acquisition will be immediately accretive to earnings per share before taking into account an estimated USD 15-20 million in net annual cost synergies expected by the end of 2012. The acquisition has been unanimously approved by both companies’ boards of directors and is expected to close in the fourth quarter of 2010, following Cellu Tissue stockholder approval, regulatory clearances, and other customary closing conditions. Weston Presidio and Russell Taylor, Cellu Tissue’s chief executive officer, which together own approximately 56% of Cellu Tissue’s common stock outstanding, have agreed to vote their shares in favor of the transaction.

“We are very pleased to have the opportunity to rapidly expand our tissue manufacturing footprint through the acquisition of Cellu Tissue and create a combined company with much stronger operational scale to better serve private label tissue customers. This acquisition, coupled with the previously announced construction of our new tissue machine and converting facilities in Shelby, North Carolina, is expected to provide both short and long-term value to our shareholders,” said Gordon Jones, chairman, president, and CEO. “Clearwater Paper already has a national sales footprint, and this acquisition gives us a rare opportunity to immediately have a national manufacturing presence to increase service to our existing private label grocery customers and expand into new private label channels,” Jones said.

The expected strategic and financial benefits of the transaction are as follows:

  • Opportunity for Clearwater Paper to establish a national manufacturing presence as a papermaker and converter of tissue products
  • Customer growth with existing and new customers
  • Increased through-air-dried (TAD) capacity
  • Logistical improvements through shipping and transportation synergies
  • Combined company annual revenues expected to be approximately USD 1.9 billion
  • Immediate accretion to earnings per share before synergies
  • Expected annual net cost synergies of USD 15-20 million by the end of 2012.

Cellu Tissue’s well-developed private label and specialty tissue businesses, which include 10 sites, complement Clearwater Paper’s existing private label tissue and pulp and paperboard businesses.

In connection with the acquisition of Cellu Tissue, Clearwater Paper intends to tender for or defease Cellu Tissue’s outstanding 11.50% senior secured notes due 2014.

BofA Merrill Lynch acted as financial advisor and Pillsbury Winthrop Shaw Pittman LLP acted as legal advisor to Clearwater Paper. Goldman, Sachs & Co. acted as financial advisor and King & Spalding LLP acted as legal advisor to Cellu Tissue.

An archived recording of a live audio webcast and conference call held 16 September 2010 may be accessed on the company's Web site at http://ir.clearwaterpaper.com/events.cfm under "Investor Relations." 

Cellu Tissue intends to file with the SEC a preliminary proxy statement and a definitive proxy statement and other relevant material in connection the merger. The definitive proxy statement will be sent or given to the stockholders of Cellu Tissue. Before making any voting or investment decision with respect to the merger, investors and stockholders of Cellu Tissue are urged to read the proxy statement and the other relevant material when they become available because they will contain important information about the merger. The proxy statement and other relevant materials (when they become available), and any other documents filed by Cellu Tissue with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov, at Cellu Tissue's Investor Relations website at cellutissue.com/investor (click "SEC filings") or from Cellu Tissue by contacting Investor Relations by mail at 1855 Lockeway Drive, Suite 501, Alpharetta, Georgia 30004, Attention: Investor Relations, or by telephone at 707-407-2164.

Clearwater Paper manufactures quality consumer tissue, bleached paperboard, and wood products at six facilities across the country. The company is a premier supplier of private label tissue to major retail grocery chains, and also produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper’s 2500 employees build shareholder value by developing strong customer partnerships through quality and service.

Cellu Tissue Holdings, Inc. is a North American producer of tissue products, with a focus on consumer-oriented private label products and a growing presence in the value retail tissue market. For more information, visit www.cellutissue.com.



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