RockTenn to acquire Simpson Tacoma paper mill
RockTenn (rocktenn.com) and Simpson Lumber Company LLC (simpson.com) announces an agreement whereby RockTenn will acquire the Simpson Tacoma Kraft Paper Mill located in Tacoma, Wash., for approximately $343 million. The purchase price reflects an EBITDA multiple of less than six times based on the mill's financial results for the 12 months ending December 2013 and the expected operating efficiencies, primarily due to the location of the mill on the West Coast. The transaction is structured as an asset purchase.
In 2013, the mill produced 465,000 tons on two paper machines and two pulp dryers that made various paper grades including containerboard, specialty kraft paper and pulp. The Tacoma Kraft Mill operates a 55-megawatt green biomass fuel cogeneration facility that was completed in 2009 and sells electricity under a long-term contract.
RockTenn has committed to invest $60 million in the mill during the next three years and has also entered into a 7-year wood chip supply contract with Simpson Lumber Company.
"The Tacoma Kraft Mill is a great strategic fit for RockTenn," says Steve Voorhees, RockTenn's Chief Executive Officer. "Adding a West Coast mill will improve our ability to satisfy West Coast customers and generate significant operating efficiencies across our system."
"We look forward to working with the entire Simpson team to build on the fine relationships they have developed over the years with the Tacoma Kraft Mill's customers, as well as enhancing the satisfaction of RockTenn's customers in the western United States," says Jim Porter, President of RockTenn's Corrugated Packaging segment.
"This is exciting news for Tacoma Kraft employees and the community.
The Tacoma Kraft Mill will be better positioned as part of RockTenn -- a successful fiber-based company that is committed to the long-term success of the mill," says Allan Trinkwald, President, Simpson Lumber Company LLC.
The transaction is subject to customary closing conditions and regulatory approvals.