Posted on April - 25 - 2010
Memphis-based International Paper buys Asian factories from competitor, raises dividend
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International Paper Co. will purchase a rival’s packaging business in Asia for $200 million in cash.
Memphis-based IP will buy 13 corrugated box plants and two specialty packaging facilities from Swedish paper company Svenska Ceullulosa Aktiebolaget.
The plants in China, Singapore, Malaysia and Indonesia employ 4,500. SCA said the Asian operation reported sales of $250 million in 2009.
“We’re buying good facilities at a good price as well as gaining an excellent team of 4,500 employees,” said IP Asia president Paul Brown. “The combination strengthens our packaging business in Asia and will make it more competitive, more profitable and better able to serve customers.”
Brown said the new business will complement the company’s 12 corrugated box plants, which are concentrated in China.
SCA CEO Jan Johansson said that divesting the plans were a strategic move to allow the company to focus on its hygiene product lines in Asia.
The sale is expected to be finalized in the second quarter of 2010. It is subject to regulatory approvals in China.
IP also approved an increase in common stock dividends from 2.5 cents per share to 12.5 cents per share.
“The dividend increase reflects improving global economic conditions, increasing demand for IP’s products and our outlook for free cash flow,” said John Faraci, IP CEO. “The dividend increase is also an important component of creating value for our shareholders.”
The higher dividends are payable on June 15 and are to be recorded by shareholders on May 17.
IP employs 56,000 people in more than 20 countries. It has manufacturing operations in North Americam Europe, Latin America, Russia, Asia and North Africa.
The company recorded net sales of more than $23 billion in 2009.
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