Clearwater Paper sells tissue unit to Sofidel for $1.06 billion

SPOKANE, Wash. - Clearwater Paper Corporation (NYSE: NYSE:CLW), a prominent supplier of consumer tissue and paperboard, has agreed to sell its tissue business to Sofidel America Corporation for $1.06 billion, a move that marks the company's strategic shift to focus on its paperboard business. The deal, announced today, is expected to close in late 2024, subject to customary conditions, including antitrust approvals.

Arsen Kitch, President and CEO of Clearwater Paper, stated that the divestiture of the tissue segment enables the company to concentrate on scaling and diversifying its paperboard operations to better serve its North American customers. The company plans to use the proceeds to significantly reduce its net debt and invest in growth initiatives for its remaining business.

The transaction involves a multiple of approximately six times the Adjusted EBITDA of the tissue business for the twelve months ending March 31, 2024. Clearwater Paper anticipates net proceeds of around $850 million from the sale. The company's decision to sell follows a strategic review of its tissue business, which has performed well financially and operationally, according to Kitch.

Luigi Lazzareschi, CEO of Sofidel, expressed enthusiasm for the acquisition, highlighting the opportunity to expand the company's U.S. market presence and enhance its sustainable, energy-efficient product offerings.

Goldman Sachs & Co. LLC acted as financial advisor and Pillsbury Winthrop Shaw Pittman LLP as legal advisor to Clearwater Paper for the transaction.

Clearwater Paper also announced that it would release its second quarter 2024 earnings on August 6, 2024, with a conference call scheduled to discuss the results.

The information in this article is based on a press release statement from Clearwater Paper Corporation.

In other recent news, Clearwater Paper Corporation made significant strides with its first-quarter financial results for 2024. The company reported an adjusted EBITDA of $61.5 million, surpassing RBC Capital Markets' estimate of $57.5 million.

Clearwater Paper also announced net sales of $496 million, largely due to significant contributions from its tissue business. Despite operational challenges due to severe weather, the company managed to reduce its net debt by $33 million and repurchased $1 million in stock.

Additionally, Clearwater Paper disclosed a $23 million investment in a new facial tissue converting line at its Shelby, North Carolina plant. The expansion is influenced by the plant's strategic location, skilled workforce, and strong local partnerships.

The company's senior vice president of consumer products, Michael Urlick, stated that the investment will cater to growing customer needs and reinforce the company's commitment to delivering superior quality and service.

Following the strong Q1 performance, RBC Capital Markets raised their price target for Clearwater Paper from $41 to $42, while maintaining a sector perform rating.

InvestingPro Insights

As Clearwater Paper Corporation (NYSE: CLW) announces the pivotal sale of its tissue business to Sofidel America Corporation, investors are keenly observing the company's financial health and market performance. The strategic move to concentrate on paperboard operations is underscored by some encouraging metrics and InvestingPro Tips that highlight the company's current and future potential.

InvestingPro Data indicates a strong market position with a market capitalization of $815.91 million and a notable price-to-earnings (P/E) ratio of 8.13. This valuation is further supported by an adjusted P/E ratio for the last twelve months as of Q1 2024, standing at 7.4. Such figures suggest a business that is potentially undervalued relative to its earnings, which may attract value investors.

In terms of performance, the company has seen a significant 6-month price total return of 43.29%, with a year-to-date (YTD) return of 35.44%. This robust growth trajectory is a positive signal for shareholders and reflects the company's solid market standing.

Two InvestingPro Tips that are particularly relevant in light of the recent news include:

1. Management's aggressive share buybacks, which often indicate confidence in the company's future prospects and a commitment to enhancing shareholder value.

2. A strong free cash flow yield as implied by the company's valuation, suggesting that Clearwater Paper is generating ample cash from its operations, which could be used for further business investments or debt reduction.

For investors interested in a deeper analysis, there are 10 additional InvestingPro Tips available that provide further insights into Clearwater Paper's financial performance and outlook. These tips can be accessed through the InvestingPro platform at https://www.investing.com/pro/CLW.

To take advantage of these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. This offer can help investors stay ahead with comprehensive data and analysis as Clearwater Paper embarks on its strategic shift.

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