International Paper enters talks over potential EMEA packaging sale
Key takeaways
- International Paper (IP) is in early-stage talks with bidders over a potential sale of its EMEA packaging business.
- The company is continuing preparations to spin off the unit, which combines its regional operations with DS Smith.
- The review comes as IP faces soft packaging demand linked to weaker consumer spending and housing activity.
International Paper (IP) is in talks with bidders about the potential sale of its Europe, Middle East and Africa (EMEA) packaging business.
The paper and packaging producer says the sale process is in an early stage and that there is “no certainty” a deal will be agreed.
“No assurance can be provided at this stage regarding the ultimate timing or structure of the proposed separation of the EMEA Packaging Business from IP,” says the company.
The announcement came after the Financial Times reported that private equity firms Lone Star and Atlas Holdings were exploring separate bids for the business, potentially valuing it at less than US$6 billion, according to Reuters.
In January, IP announced it would split into two regional, publicly traded companies. As part of the separation, it said that its EMEA Packaging business will be spun off to shareholders.
Sale or spin-off?
IP said the EMEA business would combine its regional operations with that of DS Smith, which was acquired by IP for US$7.2 billion last year.
“We have created two regional powerhouses with scale, strong customer relationships, leading brands, and talented teams,” said IP chairman and CEO Andy Silvernail.
In its latest announcement, IP says it is still pursuing the spinoff while evaluating the potential sale.
IP under pressure
Reuters reports that the paper packager has been facing “soft demand” due to pressures in consumer spending and the housing market.
Recently, IP closeed two US packaging facilities “to improve customer service.”
“IP is undergoing a transformational journey to become a stronger, sustainable packaging solutions company,” said Tom Hamic, executive vice president and president for North American Packaging Solutions at IP.
“A critical step in this journey is to streamline IP’s footprint to focus investments on facilities that will best serve customers.”
Acquisitions, mergers, and divestments in the packaging sector are increasingly used to expand geographic reach and broaden technological expertise. Recent deals include PM Studio Group’s acquisition of TNT Group, and Butterfly Equity’s acquisition of Sabert.
