International Paper Looks at Deals at Home and Abroad

International Paper Co., the world’s largest packaging company, is looking at acquiring assets in and outside of the U.S. as it forecasts a year of earnings growth.

The Memphis-based company is considering the purchase of U.S. box-conversion plants, which fold and shape cardboard boxes for specific customers, Chairman and Chief Executive Officer Mark Sutton said Wednesday in a telephone interview. International Paper is also looking at box-conversion and containerboard acquisitions in Mexico, Brazil and Europe.

“We’re always looking for opportunities to improve our coverage of the market geographically, but also building better capabilities in what kinds of products we make,” Sutton said.

Earlier this week, U.S. packaging companies Rock-Tenn Co. and MeadWestvaco Corp. agreed to merge and create International Paper’s largest competitor. That deal may drive International Paper to come up with an acquisition of its own to remain competitive, according to Todd Wenning, a Morningstar Inc. analyst.

While Sutton declined to comment on specific potential deals, he said antitrust regulators have all but ruled out allowing International Paper to acquire more U.S. containerboard-production assets.

“Given our size in U.S. containerboard, it’s difficult for us to do a whole lot more here,” he said.

Exceeding Estimates

International Paper said Wednesday its fourth-quarter profit excluding one-time items was 53 cents a share, topping the 48-cent average of 16 analysts’ estimates compiled by Bloomberg. Sales of $5.94 billion beat the $5.89 billion average estimate. The company forecast increased full-year earnings as North American demand increases.

“We feel like we’re coming into 2015 with a spring in our step and positive momentum,” Sutton said.

International Paper dropped 1.2 percent to $53.16 in New York. The shares have climbed 17 percent in the past year.

International Paper said it’s still assessing whether to adopt a master-limited partnership financial structure for some of its mills. As part of the evaluation process, the company submitted a request to the U.S. Internal Revenue Service for a so-called private letter ruling, which would give it guidance on possible tax implications.

“We haven’t seen anything that would say we need to shut down the analysis,” Sutton said Wednesday on a conference call. “By the same token, we haven’t reached a conclusion yet.”

MLPs, commonly used in the U.S. oil and natural gas industry, pay no federal income tax as long as they distribute most of their cash to shareholders.

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