Klabin is all set to acquire International Paper Corrugated Business

International Paper Corrugated Business

image source: The Business Journals

As per an announcement made on March 29 by International Paper, its Corrugated Business will soon be a part of Klabin, the biggest producer, recycler, and exporter of paper in Brazil. The business includes four box plants and three containerboard mills.

International Paper, an American pulp & paper company, undertook a strategic review of its Brazilian packaging business in 2018. The CEO of the company, Mark Sutton, stated business’s low profits and uncompetitive growth as the reasons behind the decision of that review. The pact of this International Paper’s Corrugated Business sell with Klabin is the next move in support of the previous strategic-review done by the company.

International Paper (IP) is a globally present company, having its headquarter in Memphis, Tennessee, and manufacturing operations in Europe, Latin America, North America, North Africa, and Russia. With its renewable fiber-based packaging, paper, and pulp products, the company is serving more than 25,000 customers around the globe.

In 2015, a level of uncertainty arose in the economic conditions of the Brazilian market, and the domestic consumption of IP’s products fell, giving headwinds to the company. After undertaking the strategic review of the business, the company has now announced to sell its Brazilian corrugated packaging business to Klabin S.A. for an amount of R$330 million. A third party was involved in the process of calculating the actual value of IP’s Brazilian paper corrugated business and fixed assets to ensure fairness.

According to the terms of IP and Klabin’s agreement, the payment will be made in two parts. While the first part, amounting to R$280 million ($64 million), will be paid at closing, the second part of it, R$50 million ($9.7 million), will be paid a year after that. Subject to necessary regulatory approvals and closing conditions, the company is envisioning to close this transaction during the second half of the present year.

Although International Paper is selling its Brazilian corrugated packaging business to Klabin, its Papers and Forestry business will continue to operate in the country.

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