Paper maker Stora Enso selling North American mills
HELSINKI, Finland -- The deal announced Friday sent Stora Enso stock up nearly 6% in Helsinki.
The operations being sold include eight factories and will be combined with those of Cerberus-owned NewPage Holding, based in Dayton, Ohio, a North American coated paper producer employing more than 4,300 people.
The mills being sold were once part of Consolidated Papers, which was acquired by Stora Enso in a $4.8 billion deal in 2000.
Six of the mills are in Wisconsin, one is in Duluth, Minn., and the eighth is Port Hawkesbury, Nova Scotia, Canada.
The transaction includes $1.5 billion in cash, a 20% equity stake valued at $370 million in the combined operation and $200 million in vendor notes, Stora Enso said.
The buyer is also assuming about $450 million in debt in the deal, which is expected to be completed in the first quarter of 2008.
"We believe that by combining Stora Enso's North American operations with those of NewPage, owned by Cerberus Capital, a leading private investment firm, we are contributing to the formation of a highly attractive player in the North American paper industry," Stora Enso CEO Jouko Karvinen said.
"This is the first major step in focusing our operations to improve the long-term earnings of Stora Enso."
Analysts say Stora Enso sold the mills for less than expected but markets welcomed the move as the group had invested heavily in North America but incurred losses.
"Stora Enso is getting out of seven years of difficult investments in North America. It has been an expensive adventure for them," said Harri Taittonen, chief analyst at Nordea Bank. "Stora Enso is a European company which has had better success here and this will allow the new leadership to concentrate on improving performance on one continent."
Moody's Investors Service welcomed the sale, saying Stora Enso had taken "a decisive step towards further industry consolidation," but said more should be done to improve performance.
Popular Reads
ABC News Live