Verso to Acquire NewPage for $1.4 Billion
Verso Paper Corp., a leading North American producer of coated papers, and NewPage Holdings Inc., a leading producer of printing and specialty papers, have entered into a definitive agreement under which Verso will acquire NewPage in a transaction valued at $1.4 billion. Upon closing of the transaction, the combined company will have sales of approximately $4.5 billion and 11 manufacturing facilities located in six states. The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close in the second half of 2014, subject to regulatory approvals.
Compelling Strategic Rationale
"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," said David J. Paterson, Verso's president and chief executive officer. "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. 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," said George F. Martin, president and chief executive officer of NewPage. "Together we will have increased manufacturing efficiency, greater flexibility and an even more solid and capable platform."
The combination of the two companies is expected to result in at least $175 million of pre-tax total cost synergies, which are expected to be achieved during the first 18 months after completion of the transaction. As a result of the transaction, when compared to stand-alone Verso, the combined company will be substantially deleveraged with a pro forma debt-to-EBITDA ratio materially lower than Verso's current debt-to-EBITDA ratio.