Creates one of the largest providers of virgin fibre paper and packaging with a cost and quality advantage
BillerudKorsnäs has entered into a merger agreement with Verso Corporation (Verso) under which BillerudKorsnäs has agreed to acquire Verso, a leading producer of coated papers in North America, for a purchase price of approximately USD825 million in cash. The transaction is expected to close in the second quarter of 2022.
Strategic rationale: Profitable and sustainable revenue growth
The acquisition of Verso is fully in line with BillerudKorsnäs’ strategy to drive profitable growth in paperboard, and the ambition to expand into North America. BillerudKorsnäs aims to build one of the most cost-efficient and sustainable paperboard platforms in North America by converting several of Verso’s assets into paperboard machines while maintaining its position as quality and cost leader in speciality and coated woodfree paper.
Verso’s strategic assets are positioned in a region with abundant and cost-effective fibre supply suitable for production of premium packaging materials. Verso’s location also presents favourable export opportunities to both Asia and Europe. Verso will become the platform for BillerudKorsnäs’ future expansion in North America and is expected to provide continuous growth opportunities over the next ten years and beyond. The combined company will be one of the largest providers of virgin fibre paper and packaging with a cost and quality advantage.
“The combination of BillerudKorsnäs’ expertise in high-quality virgin fibre packaging materials and Verso’s attractive assets creates an excellent platform for long-term profitable growth. We will obtain cost-effective production of coated virgin fibre material in the Midwestern United States. We also plan to sequentially transform part of the business into paperboard production while continuing to serve the U.S. customers. Our investments will create new US-based jobs in a growing market and accelerate the transition from plastic-based packaging materials to renewable sources,” said Christoph Michalski, President and CEO of BillerudKorsnäs.
Converting assets into board production
The plan is to convert Verso’s largest facility, its Escanaba mill, into a world-class, sustainable, fully integrated paperboard production site. One machine is estimated to be converted by 2025, a second machine by 2029, to a total capacity of around 1,100 ktonnes. BillerudKorsnäs estimates that the investment for the conversion project will be up to SEK 9 billion, whereof around two thirds to be invested up to 2025 and the remainder up to 2029. The increased net capacity of around 400 ktonnes compared to today together with a more profitable product mix will create significant shareholder value over time.
In addition to continued paper production in Escanaba during the conversion, BillerudKorsnäs plans to continue operating the Quinnesec mill. It has an annual capacity of around 400 ktonnes of paper and 200 ktonnes of market pulp and is a cost and quality leader in graphical paper, specifically in coated woodfree and specialty papers. BillerudKorsnäs is committed to continuing to serve Verso’s existing customers.
About Verso Corporation
Verso Corporation (Verso) is a leading American producer of graphic, specialty and packaging paper and market pulp, with a long-standing reputation for quality and reliability. Verso is headquartered in Miamisburg, Ohio, and have two paper mills in Michigan, a roll to sheet converting facility in Wisconsin (paper production idled), and two distribution centres in Sauk Village, Illinois and Bedford, Pennsylvania. The production facilities are strategically located within close proximity to major customers, and the annual production capacity totals around 1.1 million tonnes of paper. Verso has around 1,700 employees. For the twelve months ended 30 September 2021, Verso’s net sales amounted to USD1,264 million. Verso is listed on the New York Stock Exchange. For more information, see www.versoco.com