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MEMPHIS - International Paper (NYSE:IP), a prominent player in the Containers & Packaging industry with a market capitalization of $24.9 billion, announced Thursday it has reached a definitive agreement to sell its Global Cellulose Fibers business to American Industrial Partners (AIP) for $1.5 billion, subject to closing adjustments. According to InvestingPro analysis, the company currently appears fairly valued based on its comprehensive Fair Value model.
The transaction, expected to close by year-end pending regulatory approvals, includes the issuance of preferred stock with an initial liquidation preference of $190 million. The deal comes as International Paper maintains a solid financial position with a current ratio of 1.33 and has demonstrated its commitment to shareholder returns, maintaining dividend payments for 55 consecutive years with a current yield of 3.94%.
The company also announced a $250 million investment to convert a machine at its Riverdale mill in Selma, Alabama, to produce containerboard. Simultaneously, International Paper will permanently close its Savannah containerboard mill, Savannah packaging facility, and Riceboro containerboard mill in Georgia.
These operational changes will result in approximately 1,100 job losses and reduce the company’s annual containerboard capacity by about one million tons. The Riceboro and Savannah facilities will shut down in phases by the end of September 2025, while the Riverdale conversion is expected to be completed by the third quarter of 2026.
"While difficult, these decisions are essential to positioning International Paper for long-term success," said Tom Hamic, Executive Vice President and President of International Paper’s North America Packaging Solutions business, according to the press release.
The Global Cellulose Fibers business, which generated $2.8 billion in revenue in 2024, produces pulp for products including towels, tissues, diapers, and other personal care items. The business employs 3,300 people globally across nine manufacturing facilities and eight regional offices.
International Paper had previously announced last fall it was reviewing strategic alternatives for the cellulose fibers business as part of its strategy to focus on sustainable packaging solutions.
Morgan Stanley & Co. LLC served as financial advisor to International Paper for the transaction.
In other recent news, International Paper reported its Q2 2025 earnings, revealing a significant miss in earnings per share (EPS) compared to forecasts. The company posted an EPS of $0.20, falling short of the $0.39 forecast, marking a 48.72% negative surprise. However, revenue exceeded expectations, reaching $6.77 billion against a forecast of $6.57 billion. JPMorgan responded to the earnings miss by downgrading International Paper’s stock rating from Overweight to Neutral and slightly lowering its price target to $54.00 from $55.00. The firm highlighted particular weakness in the company’s EMEA segment. Meanwhile, UBS reiterated its Buy rating with a $60.00 price target, citing the company’s cost savings and new business wins. Additionally, American Industrial Partners announced a definitive agreement to acquire International Paper’s Global Cellulose Fibers division. The transaction is expected to close in Q4 2025, establishing the division as an independent company.
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