WestRock Co. has agreed to buy paper recycler SP Fiber Holdings Inc. and its minority holding in a renewable energy joint venture for a deal worth $288.5 million.
The Norcross, Ga.-based WestRock, which began operations in July as a merger between paper recyclers and product makers MeadWestvaco Corp. and Rock-Tenn Co., acquired SP Fiber, which makes recycled containerboard and kraft and bag paper, with mills in Dublin, Ga., and Newberg, Ore., according to a news release.
WestRock also gains SP Fiber’s 48-percent interest in Green Power Solutions of Georgia LLC (GPS). The renewable energy joint venture provides energy to Georgia Power and steam to the Dublin paper mill.
SP Fiber makes containerboard and kraft and bag paper from 100-percent post-consumer recycled fiber, for end use in consumer and corrugated packaging.
"The Dublin and Newberg mills will balance the fiber mix of our mill system, and the addition of kraft and bag paper will diversify our product offering," said WestRock CEO Steve Voorhees. "We expect to apply our operating capabilities to improve the cost structure of both mills. As a result, our mill system will be better positioned to serve the increasing demand for lighter weight containerboard and kraft paper."
Said Jim Porter, president of WestRock Paper Solutions, “Adding this modern recycled containerboard and kraft paper production provides us with efficiencies in our mill system that will enable us to more effectively serve our customers."
WestRock expects the transaction to generate significant synergies and be accretive to earnings in the second half of fiscal 2016. The transaction is subject to regulatory approval.
Before the deal WestRock represented $15 billion in annual revenue and 42,000 employees in 30 countries and 275 operating locations.
Megadeals have marked the paper recycling and paper products industry. Besides the MeadWestvaco Corp. and Rock-Tenn Co. merger, in February the Atlanta-based Caraustar Industries Inc. completed its purchase of major paper recycling firm The Newark Group Inc. Newark, which is based in Cranford, N.J., employs about 1,500 and operates more than 20 North American manufacturing plants. Newark makes recycled paperboard, linerboard, industrial tubes, cores and other converted products, including book covers and packaging solutions.
In 2013 GP Harmon Recycling purchased The Highlands Group Inc.’s plastics recycling facility in Elizabethton, Tenn. The Jericho, N.Y.-based subsidiary of Georgia-Pacific expanded from paper recycling in 2007 to include materials such as plastics and metal.