KapStone Paper and Packaging Corporation and Longview Fibre Paper and Packaging, Inc. have signed an agreement for KapStone to acquire the stock of Longview Fibre Paper and Packaging, Inc. from Brookfield Capital Partners II, a private equity fund managed by Brookfield Asset Management Inc. in a cash free, debt free transaction for $1.025 billion in cash and subject to certain post-closing adjustments. Closing of the acquisition is subject to a number of customary conditions, including regulatory review.
Longview manufactures high quality containerboard, lightweight high performance multiwall paper, specialty Kraft papers, and corrugated containers located in the Pacific Northwest region. Longview's operations include a mill located in Longview, WA equipped with five paper machines which produce 1.15 million tons of containerboard and Kraft paper annually. In 2012, Longview generated $831 million in net sales and $118 million of EBITDA.  In the first quarter of 2013, Longview's net sales were $217 million generating $42 million of EBITDA.  
Chairman and Chief Executive Officer of KapStone, Roger W. Stone, stated, "Acquiring Longview is an outstanding opportunity for numerous reasons. The acquisition immediately adds value for our shareholders by increasing earnings and generating very strong free cash flow.  The deal is accretive to our bottom-line from day one. Our balance sheet, which was strong going into this transaction, remains strong after the acquisition. The combined company is expected to deliver substantial free cash flow in the first year allowing KapStone to quickly de-lever." 
"This acquisition will increase our exposure to the highly desirable containerboard segment.  It also broadens our Kraft paper line and makes KapStone a global producer of high performance extensible multiwall paper, a grade which is growing at about 4% per year."
Matt Kaplan, president and coo of KapStone, added, "We look forward to having the Longview team join KapStone. Their track record is very impressive and over the past several years, Longview has increased productivity, benefitted from increased demand for containerboard and extensible Kraft paper, and experienced declining wood costs.  We anticipate synergies of approximately $10 million within the first 18 months." 
"I would like to thank all of the people at Longview who have contributed toward building a safe and successful business and I am confident that this success will continue with KapStone," said Hugh Sutcliffe, Managing Partner of Brookfield.
Randy Nebel, President of Longview, commented, "We are excited to be part of the KapStone family.  It's a great opportunity for our customers and employees. Our product lines complement each other and provide us with a national presence in corrugated containers. We thank Brookfield for the support they have given us."
Stone concluded, "Strategically, the acquisition of Longview is the perfect fit for KapStone, and transforms KapStone into a much more profitable and stronger company providing additional momentum for KapStone to continue its record of excellence in increasing value to our shareholders."   
KapStone has committed financing from Bank of America, Barclays Bank, and Wells Fargo Bank. The transaction is expected to close in the summer of 2013.