International Paper completes sale of fine papers business to Mohawk for approximately $60 million

May 04, 2005. /Lesprom Network/. International Paper (NYSE:IP) has completed the sale of its Fine Papers business to Mohawk Paper Mills, Inc., of Cohoes, N.Y. Subject to certain adjustments to be made after closing, the company anticipates cash proceeds from the transaction will be approximately $60 million. The new Mohawk * 6 power brands including Strathmore Writing, Mohawk Superfine, Navajo, Options, Via, Mohawk Color Copy * 6 paper machines * 2 distribution centers * 2 converting facilities * 800 employees * 175,000 tons of capacity in three states * Next day delivery to 95% of North America The Fine Papers Business includes the writing, text and cover papers and artist papers segments. Included in the sale are the Hamilton, Ohio, paper mill; the Saybrook, Ohio, converting center; and the Westfield, Mass., Artist Papers business. The new company will employ approximately 800 people. The sale will also include the Strathmore(R), BriteHue(R), Via(R), Beckett(R), and Strathmore Artist Papers(R) brands. This acquisition more than doubles the size and revenue of Mohawk, making it the largest North American supplier of premium uncoated papers; and brings together a number of the industry's most trusted brands under the proven management leadership of Mohawk. A five-year capital plan is in development and Mohawk will begin investing in the new operations immediately. The flagship of the purchase is legacy brand Strathmore, an internationally recognized name in corporate identity papers and artist papers. The integration of identity/writing papers will ensure Mohawk's leadership position in the world of fine paper. The addition of Strathmore Artist Papers provides access to retail channels that are increasingly important to Mohawk. Mohawk's expanded offering ranges from writing, text and cover, opaque, coated, brights, digital and color copy papers. The new Mohawk will have the capacity to produce 175,000 tons of premium paper per year, now offering a complete and diverse range of papers for corporations, paper merchants, printers and designers. According to Thomas O'Connor, Jr., Mohawk Chairman and CEO, "From every single aspect, this is a perfect fit. The manufacturing and converting assets are complementary to ours, in terms of capability and geography. The Fine Papers business gives us access to expanded distribution, and a mix of products that complement ours without competing. So, unlike many recent mergers in our industry, the combination of IP Fine Papers and Mohawk presents very little overlap and brings significant value across the product, marketing, manufacturing and distribution spectrum." This acquisition is a moment of transformation for Mohawk. The management team of this privately held business intends to bring focus and clarity to the premium papers market and add value for its trading partners. "As the de facto leader in the industry, Mohawk's expanded participation will set the agenda for fine papers marketing. New products and programs will help expand the market for premium papers and improve profitability. Mohawk is known in the industry for its innovation, responsiveness, flexibility and efficiency and those best practices will be brought to bear immediately," says O'Connor. "We are lucky to be stepping into well-run, well-maintained facilities with a highly trained, motivated workforce. We are all looking forward to learning from one another," he adds. Mohawk is committed to evolving its portfolio of strong, vibrant brands to continue to anticipate market needs. Brands O'Connor says that customers may now view Mohawk as their single-source for premium, performance uncoated papers, coated papers, Inxwell(R) papers, Digital Papers, specialty colored/textured papers, as well as for everyday papers for all types of commercial printing. The papers are used for all traditional offset and digital printing applications. Well-respected brands to join Mohawk Strathmore Writing Strathmore Grandee Strathmore Elements Strathmore Pastelle Strathmore Artist Papers Beckett Expression Beckett Cambric Beckett Ridge Beckett Concept Via BriteHue Service Mohawk is well known in the industry as a company that is easy to do business with. That won't change with the new acquisition. In fact, the new economies of scale in the operations and logistics functions will translate into better service for all customers as Mohawk expands its warehouse locations and shipping schedules. "We have incredible back-office operations," says O'Connor. Facilities The acquisition includes a paper mill in Hamilton, OH with three fine paper machines, the Saybrook Converting Center located close to Erie, PA in Northern Ohio -- a leased facility with state of the art warehousing and converting -- and the Strathmore Artist Papers operations in Westfield, MA. "By having a premium paper mill strategically located in the heart of the country, Mohawk will be able to redefine its service in an important geographic area. Mohawk also announced that its Hamilton, Ohio facility will be named The Beckett Mill, to honor the rich heritage of the Beckett brand. The Beckett Paper Company was established in 1848 at Hamilton, Ohio. It is the oldest industry in Hamilton and is believed to be the oldest paper mill west of the Allegheny Mountains.