UPDATE: Nov. 1, 2024: Clearwater Paper completed the sale of its tissue business to Sofidel for $1.06 billion.
“This is the next big step in transforming Clearwater into a premier independent paperboard packaging supplier in North America,” said Clearwater CEO Arsen Kitch in a statement. “The Tissue team has built a fantastic business and delivered strong results. I am proud of their work and wish them well.”
Clearwater plans to use the proceeds to pay down debt. The transaction involves four facilities in Illinois, Iowa, Nevada and North Carolina. Clearwater previously announced a site-sharing agreement with Sofidel to retain certain assets at the Iowa location.
July 22: Clearwater Paper entered an agreement to sell its tissue business to tissue specialist Sofidel America for $1.06 billion, it announced Monday. This marks the next step for the Spokane, Washington-based consumer tissue and bleached paperboard company in narrowing its focus to paperboard.
The companies anticipate the transaction will close in the second half of this year, pending regulatory approval. Clearwater expects net proceeds of $850 million, which it will use to reduce debt and invest in growth initiatives. Clearwater has four tissue production facilities and one tissue business administrative office in the U.S., according to its website.
Clearwater had disclosed in previous earnings reports that it was reviewing strategic options for its tissue business while it aims to transform into a “premier, independent supplier of paperboard to North American converters.” Although the tissue business “delivered excellent financial and operational performance,” it “needs scale and investment to drive growth over the longer term,” CEO Arsen Kitch said in a statement.
“Upon completion of this transaction, we intend to deleverage our balance sheet while scaling and diversifying our paperboard business to meet the needs of our customers,” Kitch said in the statement. This deal “positions Clearwater Paper for its next chapter of growth and value creation.”
In February, Graphic Packaging International announced that Clearwater would buy its bleached paperboard manufacturing plant in Augusta, Georgia, for $700 million. GPI executives said on an earnings call that the plant no longer fit with that company’s long-term strategy because it produces solid bleached sulfate, whereas GPI is seeing more demand for recycled content fiber grades. Both companies announced that deal closed in May.
The tissue business sale is positive for Clearwater and its shares, according to an RBC Capital Markets memo to investors Monday. It added that the transaction price is roughly in line with analysts’ expectations.
Severe weather in Q1 shut down production at Clearwater’s paperboard plant in Lewiston, Idaho. The company also expected a hit from planned maintenance at that same plant during Q2.
Despite the move away from tissue, Clearwater in June announced that it invested $23 million into a new facial tissue converting line at its Shelby, North Carolina, consumer products facility. Plus, it disclosed in Q1 2024 and Q4 2023 earnings reports that tissue demand was strong and that sector drove growth in its financial results; its retail tissue volumes increased 5% year over year in Q1 2024. That same quarter, net sales in pulp and paperboard dropped 12% year over year. Executives said they expected paperboard demand to improve in the second half of this year.
The company plans to release its second-quarter earnings results on Aug. 6.
