IP makes deal to buy Temple

International Paper, headquartered in Memphis, will buy Temple-Inland Inc. of Austin, Texas in a $4.3 billion deal announced Tuesday, September 6.

The announcement comes after IP made its first offer in July and the board of the number three maker of corrugated packaging quickly rejected the offer of $30.60 per share and recommended shareholders not take the offer.

The deal announced Tuesday includes a per share price of $32 plus IP will assume $600 million of Temple-Inland's year end debt.

Temple-Inland executives will hold a special meeting of its stockholders to vote on the deal. The merger will also be subject to review by the U.S. Justice Department in keeping with antitrust regulations.

"The combined company will be positioned to be a leader in providing high quality products for its customers," said Doyle R. Simons, Temple-Inland chairman and chief executive officer.

International Paper chairman and CEO John Faraci said the terms are "financially attractive for both sets of shareholders."

"Acquiring Temple-Inland enhances our ability to generate additional cash flow while maintaining our strong balance sheet," he said.

The deal was made days before the extension of IP's initial offer to shareholders was due to run out.

There were no discussions underway between the two corporations. That's when IP chief financial officer Tim Nicholls talked about the company and the offer at the Memphis Rotary Club.

Temple-Inland executives initially said the shareholder offer was too low and disagreed with IP's estimate that the company's net debt was $828 million.

Temple-Inland, in July, put its net debt at $737 million. Faraci, in the early stages, described Temple-Inland's price expectations as "unrealistic." But Faraci also told employees that he didn't regard IP's attempt to buy Temple-Inland as a "hostile takeover."

"It's not hostile. It's unsolicited," Faraci said in remarks to IP employees in late July that were filed with the Securities and Exchange Commission. "They didn't ask us to make an offer for the company. We decided to. The word hostile gets thrown around. It gets some attention."

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