Verso to Buy Paper Maker NewPage in $907 Million Deal

Verso Paper Corp. (VRS), a maker of coated paper used in magazines, agreed to acquire competitor NewPage Holdings Inc. in a transaction with a value of at least $906.9 million after merger talks failed in 2012.

NewPage equity holders will receive $900 million, including $250 million of cash, most of which will paid as a special dividend, and $650 million of new Verso notes to be issued at closing, the companies today said in a statement. NewPage equity holders also will get Verso stock representing at least 20 percent of outstanding shares. The transaction also includes refinancing a $500 million NewPage loan, which brings the deal value to $1.4 billion, the companies said.

The combined company will have 11 plants in six states generating about $4.5 billion of revenue, allowing it to better compete amid declining demand for magazine paper. NewPage, based in Miamisburg, Ohio, filed for bankruptcy protection in 2011 as it struggled with a shift of readers online and won court approval for a reorganization plan in December 2012. Verso, based in Memphis, Tennessee, had discussed buying NewPage in 2012.

“We continue to face increased competition from electronic substitution for print and international producers,” Verso Chief Executive Officer David J. Paterson said in the statement. “As a larger, more efficient organization with a sustainable capital structure, we will be better positioned to compete effectively.”

Shares Rise

Verso rose 165 percent to $1.72 at 10:19 a.m. in New York, after earlier rising 323 percent, the most intraday ever.

The transaction is expected to close in the second half, pending regulatory approvals, the companies said.

Verso was advised by Evercore Partners Inc., Barclays Plc, Credit Suisse Group AG and Palisades Capital LLC, and its legal counsel was Kirkland & Ellis LLP, Morgan, Lewis & Bockius LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP. NewPage was advised by Goldman Sachs Group Inc., and its legal counsel is Sullivan & Cromwell LLP.

The value of the NewPage deal was calculated based on the 53.2 million shares of Verso that were outstanding as of Oct. 31, according to data compiled by Bloomberg.

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