International Paper Divests North America Consumer Packaging

International Paper Company IP recently completed the divesture of its consumer packaging business in North America. The assets were sold to Graphic Packaging Holding Company GPK, a leading provider of paper-based packaging solutions for food, beverage and other consumer product companies. The divested asset portfolio included two manufacturing plants and four converting facilities with employee strength of roughly 3,900.

Graphic Packaging will own 79.5% of the combined company while International Paper will have ownership of the remainder. The transaction would help Graphic Packaging extend its business in the foodservice and folding carton markets. Also, the divesture helped International Paper to focus on its core businesses and strengthen its balance sheet as Graphic Packaging assumed $660 million of its debt.

Over the years, International Paper has divested its non-core businesses to focus more resources on high-return capital projects in its core businesses that can drive additional earnings growth. With continued portfolio restructuring activities, the paper and packaging products manufacturer aims to improve its long-term profitability as it faces stiff competition from diverse players across the industry. International Paper has underperformed the industry in the last three months with an average return of 3.5% compared with 8% for the latter.

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