International Paper Co. said Monday it had agreed to sell its corrugated-packaging business in China and Southeast Asia for about $150 million, furthering the company’s plans to pivot its manufacturing operations away from the region.
International Paper sells coated paper for items such as cigarette packages and coated board for packaging in China. As early as October, International Paper had signed a letter of intent to sell its Chinese corrugated-packaging business to a prospective buyer.
The deal to sell the business to Xiamen Bridge Hexing Equity Investment Partnership Enterprise is worth about one billion yuan, which translates to about $150 million at the current exchange rate, the company said. The transaction, subject to closing conditions and regulatory approval, is expected to be completed in the next few months, according to the company.
International Paper’s corrugated-packaging business in Asia has 18 plants and a workforce of approximately 3,000 employees.
The company’s executives have previously said there is no real advantage to having local production in China because raw materials, such as fiber, are imported.
The Memphis, Tenn.-based company, which recently completed the sale of its Chinese joint venture, plans to serve China by exporting from plants in Russia and the U.S.
International Paper last month reported a 33% rise in fourth-quarter earnings, handily beating Wall Street expectations despite foreign currencies and slowing economies dragging down revenue, as its Russian joint venture swung to a profit. Results at the company, which makes paper and packaging products that range from boxes for e-commerce to fluff pulp for diapers and to-go containers for restaurants, are often early indicators of consumer demand.
Source : wsj.com