QUINNESEC - Verso Paper is buying NewPage Holdings Inc. in a deal valued at $1.4 billion including debt, corporation officials announced today.
Privately held NewPage produces printing and specialty papers.
Verso President and CEO David Paterson said in a statement that the buyout will put it in a better position to face increased competition. Paterson will lead the combined company, which will have 11 manufacturing plants in six states, including Verso's mill in Quinnesec and New Page's mill in Escanaba.
A NewPage director will join Verso's board at closing.
The deal was unanimously approved by both companies' boards. It is targeted to close in the second half of the year.
Upon closing of the transaction, the combined company will have sales of approximately $4.5 billion.
"The combination of Verso and NewPage will create a stronger business that is better positioned to serve our customers and compete in a competitive global marketplace," Paterson said. "We continue to face increased competition from electronic substitution for print and international producers, but as a larger, more efficient organization with a sustainable capital structure, we will be better positioned to compete effectively and deliver solid results despite the industry's continuing challenges. Furthermore, we believe the transaction provides stakeholders in both companies with meaningful, compelling value."
"We believe this agreement with Verso represents the best way forward for our stakeholders," said George F. Martin, president and chief executive officer of NewPage. "A combined Verso and NewPage will be able to achieve greater efficiencies, which will enable it to serve clients with a high level of product quality and innovation. Together we will have increased manufacturing efficiency, greater flexibility and an even more solid and capable platform."
Under the terms of the transaction, NewPage's equity holders will receive total cash and debt consideration of $900 million, consisting of $250 million in cash, most of which will be paid to the stockholders as a special dividend prior to closing and the remainder of which will be paid at closing, and $650 million of new Verso first lien notes to be issued at closing.
NewPage's equity holders also will receive shares of Verso common stock representing 20 percent (subject to potential adjustment up to 25 percent under certain circumstances) of the outstanding shares as of immediately prior to closing.
Verso will finance the acquisition through $750 million in committed financing, which will be used to pay the cash portion of the merger consideration and to refinance NewPage's existing $500 million term loan prior to closing.
The value of the transaction is $1.4 billion, composed of the cash consideration, the $650 million of new Verso first lien notes, the Verso common stock and the refinancing of NewPage's $500 million term loan.
Verso Paper Corp. is a leading producer of coated papers, including coated groundwood and coated freesheet, and specialty products, with $1.5 billion in net sales for the year ended Dec. 31.
Verso's paper products are used primarily in media and marketing applications, including magazines, catalogs and commercial printing applications such as high-end advertising brochures, annual reports and direct-mail advertising.
NewPage is a leading producer of printing and specialty papers with $3.1 billion in net sales for the year ended Dec. 31.
NewPage's portfolio of paper products includes coated, supercalendered and specialty papers. These papers are used in commercial
printing to create corporate collateral, magazines, catalogs, books, coupons, inserts and direct mail, as well as in specialty paper applications including beverage bottle labels, food and medical packaging, pressure-sensitive labels and release liners.