Photo: Wisconsin Department of Natural Resources via Flickr
SCA (Svenska Cellulosa Aktiebolaget), a global hygiene and forest products company based in Stockholm, and Wausau Paper Corp. of Mosinee, Wisconsin, a producer of away-from-home tissue products, have announced that SCA will acquire Wausau Paper for $10.25 per share, or around $513 million (approximately SEK 4.2 billion) in cash.
The boards of directors of both companies have approved the merger agreement representing a premium of 40.6 percent to Wausau Paper’s closing price on Oct. 12, 2015, and a premium of 11.3 percent to the Wausau Paper 52-week volume-weighted average price.
Wausau Paper is one of the largest away-from-home tissue companies in North America. With approximately 900 employees, the company manufactures and markets away-from-home towel and tissue products along with soap and dispensing systems. The company says its manufacturing processes allow for the production of its towels and tissue entirely from recycled paper.
The companies say their combined operations will provide customers with access to a comprehensive portfolio of food service offerings and premium tissue and washroom products. Following completion of the acquisition, SCA says it will continue to honor Wausau Paper’s existing customer contracts and programs.
“SCA is the world leading supplier of Away-from-Home tissue with the global brand Tork. The acquisition of Wausau Paper is an excellent strategic fit and strengthens our presence in North America. The Wausau Paper product portfolio complements SCA’s offerings in North America and gives us access to premium tissue in that region. We expect the acquisition to generate benefits for SCA and our customers,” says Magnus Groth, president and CEO of SCA.
“Our board has undertaken a thorough process to explore all of Wausau Paper’s options and has determined SCA’s offer creates substantial value and is in the best interests of the company and its shareholders. This transaction is a testament to our talented team of employees and the strong, focused company that they have worked to create. Our customers will benefit from expanded products and services from a company that shares similar values around customer service and sustainability,” says Michael C. Burandt, chairman and CEO of Wausau Paper.
Wausau Paper’s reported sales for the first half year 2015 amounted to $75 million (SEK 1.5 billion). In 2014, Wausau Paper’s reported sales amounted to $352 million (SEK 2.4 billion).
“This acquisition will benefit customers by providing access to the superior sales, service, innovation and logistics that the combined business can provide. It will expand SCA’s premium tissue and washroom assortment and give Wausau Paper customers the ability to purchase products from SCA’s industry-leading food service offerings—in essence offering customers a ‘one-stop shop’ for all professional hygiene needs. Furthermore, we look forward to welcoming Wausau Paper’s employees to the SCA family,” says Don Lewis, president, SCA Americas.
The acquisition is expected to generate annual synergies amounting to approximately $40 million with the full effect three years after closing. Synergies are expected in sourcing, production, logistics, reduced imports, increased volumes of premium products and reduced costs. The restructuring costs are expected to amount to approximately $50 million.
The completion of the transaction is subject to Wausau Paper shareholder and regulatory approvals. The Wausau Paper board will recommend that its shareholders vote in favor of the acquisition by SCA. Closing is expected to take place during the first quarter of 2016, according to the companies.