Weyerhaeuser nets $2.2bn in pulp mills sale

The sale of cellulose fibres pulp mills to International Paper supports a $2.5bn stock buyback programme by the timber REIT.

Listed timberland real estate investment trust (REIT) Weyerhaeuser has sold its cellulose fibres pulp mills to International Paper for $2.2 billion.

The timber management giant will use proceeds from the sale to repay term loans, as part of a $2.5 billion share buyback effort, which began in 2014 and was expanded last August.

“This transaction delivers compelling value for Weyerhaeuser shareholders and further focuses our portfolio as we work to be the world’s premier timber, land, and forest products company,” said chief executive Doyle Simons.

International Paper will acquire five pulp mills with a combined 1.9 tonne annual production capacity in the deal. The mills are located in Mississippi, Georgia, North Carolina and Alberta. Also included in the sale are two modified fibre mills in Mississippi and Poland.

“Weyerhaeuser’s pulp business has an outstanding customer base served from low-cost, well-run assets that complement our existing system and offers significant synergy opportunities,” said International Paper chief executive Mark Sutton. “This transaction will position us as the premier global supplier of fluff pulp and will enhance our ability to generate additional free cashflow.”

Weyerhaeuser is also reviewing potential options for its liquid packaging board facility and a newsprint and publishing papers jointventure with Nippon Paper according to a company release.

The acquisition is expected to close in the fourth quarter of 2016, subject to closing conditions, primarily regulatory approval.

Weyerhaeser reached a deal to merge with timber company Plum Creek in November, in an $8.4 billion deal that made the New York Stock Exchange-listed REIT the largest timberland owner in the United States, with land holdings in excess of 13 million acres and a total value of roughly $23 billion.

International Paper is a New York Stock Exchange-listed packaging and paper company based in Tennessee, with operations in the Americas, Europe, Russia, Asia and Africa.