Wausau Paper Corp. (WPP) Rockets on SCA Takeover Bid
Shares of Mosinee, Wisconsin, based Wausau Paper Corp. (WPP) rose sharply on Tuesday, against the backrop of a moderately lower day in stocks overall. Wausau's stock was up 40.19%, rising $2.19 per share, to close at $10.22, on volume of 38,740,243 shares. The rise followed the announcement that Swedish paper company SCA has agreed to purchase Wausau in an all-cash buy-out.
Founded in 1899, Wausau Paper Corp. manufactures, converts, and sells a complete line of towel and tissue products, as well as soap and dispensing systems for the industrial and commercial away-from-home market.
News of the buyout was released in the early morning hours Tuesday. SCA, a Swedish based global hygiene and forest products company has agreed to acquire Wausau for $10.25 per share, for total consideration of $513 million. The agreed upon price represents a 40.6% premium above the closing price of Wausau's stock on Monday. It is also a premium of 11.3% over Wausau's 52 week volume weighted average price. The transaction will be an all-cash buyout, and it has been unanimously approved by the boards of directors of both SCA and Wausau.
The combined operations are expected to result in synergies in sourcing, production, logistics, reduced imports, increased volumes of premium products and reduced SG&A costs. In total, those synergies are expected to improve cash flow by $40 million per year, fully effective within three years of the buyout. Restructuring costs are expected to be in the neighborhood of $50 million.
“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," said Wausau Paper Chairman and CEO, Michael C. Burandt. "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.”
The buyout is subject to approval by both shareholders of Wausau and by regulatory authorities. As expected, the board of directors of Wausau will recommend that its shareholders approve the buyout, which is expected to take place sometime during the first quater of 2016.
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