Cerberus-owned New Page Corp. acquires Stora Enso unit for $2 billion

Finland''s Stora Enso Oyj, the largest paper manufacturer in the world, has agreed to sell its North American paper operations to Miamisburg, Ohio-based NewPage Corporation for $2.07 billion. NewPage is owned by Cerberus Capital.

NewPage will pay Stora $1.5 billion in cash, $200 million in vendor notes and 19.9 per cent in shares valued at $370 million in the new company that will combine NewPage and Stora Enso North America operations. NewPage will also assume net liabilities of $450 million. The Finnish group will use the sale proceeds to bring down its debts.

As part of the transaction, Stora Enso will divest eight publication, fine paper and speciality paper mills which will reduce the Group''s annual production capacity by 2.75 million tonnes and number of personnel by about 4,350. The divested mills include Biron, Duluth, Kimberly, Niagara, Port Hawkesbury, Stevens Point, Whiting and Wisconsin Rapids mills. Stora Enso will retain Corenso''s North American operations. Corenso produces cores and coreboard for industrial use in various fields of business.

NewPage, one of the biggest US paper companies, has a 22 per cent share of the US coated-paper market. The Stora Enso North America deal will take its market share to 28 per cent in coated paper and 28 per cent in supercalendered-paper. The acquisition will also give it specialty operations making paper for bottles and cans.

NewPage and Stora Enso North America''s combined pro forma annual sales were approximately $4,300 million in 2006, and EBITDA was $525 million. The combined entity will have 12 paper mills with the capacity to produce 4.75 million tones of paper and related products. Stora, which will retain 19.9 per cent interest in this entity, will share the benefits, including value creation from significant cost synergies.

Stora''s misadventures in America began with the acquisition of Consolidated Papers Inc. of Wisconsin Rapids for $4.9 billion in 2000. That didn''t work out well, and the Finnish group has been in trying hard to slash costs and write down assets.