Feb. 10 (Bloomberg) -- International Paper Co., the world’s largest pulp and paper producer, won U.S. antitrust approval for its $3.7 billion takeover of Temple-Inland Inc. on condition it sell three containerboard mills.
The settlement requires the divestment of Temple-Inland’s containerboard plants in Waverly, Tennessee, and Ontario, California, the U.S. Department of Justice said today in a statement. International Paper must also sell either its mill in Oxnard, California, or its factory at Henderson, Kentucky. The sales will account for a total of about 950,000 tons of containerboard capacity, the Justice Department said.
Without the asset sales, the takeover would have given Memphis-based International Paper the ability to reduce output and increase U.S. prices of the paper used to make corrugated boxes, the Justice Department said. International Paper is the largest maker of containerboard in North America while Temple-Inland is the third-biggest, it said.
Corrugated boxes made from the material are used to ship more than 90 percent of all goods nationwide, Sharis A. Pozen, the Department of Justice’s acting assistant attorney general and its top antitrust official, said in the statement.
International Paper’s takeover of Temple-Inland will boost its share of North America’s corrugated-packaging market to about 34 percent from 27 percent, Chief Executive Officer John Faraci said today in a telephone interview. In June, when he announced the $32-a-share offer, Faraci said market share would climb to 37 percent.
The approval of the deal effectively caps International Paper’s ability to expand in containerboard in North America through acquisitions, Faraci said. The takeover is expected to bring cost savings of more than $300 million on an annual basis within 24 months, he said.
Temple-Inland increased 0.4 percent to $31.99 at the close in New York. International Paper rose 1.2 percent to $31.85.
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