IP to acquire Temple-Inland

International Paper’s attempt to take over Temple-Inland concluded today with an announcement that the two companies have entered into a merger agreement.

International Paper will acquire all of the outstanding common stock of Temple-Inland for $32 per share in cash, plus the assumption of $600 million in Temple-Inland’s year-end debt. The total transaction value is approximately $4.3 billion.

The deal has been approved by the boards of both companies, according to a document filed with the Securities and Exchange Commission (SEC). The transaction is expected to close in the first quarter of 2012.

The combination is expected to yield synergies of approximately $300 million annually within 24 months of closing, derived primarily from the areas of operations, freight, logistics, selling expense and overhead.

As stipulated by the merger agreement, International Paper will terminate its existing tender offer to acquire all of the outstanding common shares of Temple-Inland for $30.60 per share, and Temple-Inland will hold a special meeting of its stockholders to vote on the transaction. In addition to the approval of Temple-Inland’s stockholders, the transaction is subject to customary closing conditions, including antitrust approvals.

On June 6, Temple-Inland announced it had received an unsolicited proposal from International Paper to acquire the company for $30.60 per share in cash. Temple-Inland's board of directors voted unanimously to reject that offer, saying it “grossly undervalued” the company and was not in the best interest of Temple-Inland's stockholders. The following month, International Paper launched its hostile takeover bid.

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