Dive Brief:
- Germany-based Palm Group offered to buy five corrugated fiber box plants in Europe from Tennessee-based International Paper, IP announced Monday. The European Commission required these divestitures for approval of International Paper’s acquisition of DS Smith, which closed in January.
- The companies are in exclusive negotiations for a transaction that includes two box plants and one sheet plant in Normandy, France; one box plant in Ovar, Portugal; and one box plant in Bilbao, Spain.
- The deal is expected to close by the end of the second quarter. Once it does, IP will have satisfied all of the EC’s requirements for the DS Smith acquisition, IP said in a news release.
Dive Insight:
The European Commission required these divestitures due to concerns that International Paper would have too much concentration in these areas after acquiring DS Smith, which could reduce market competition. Up to 750 people collectively are employed at the five plants, according to the commission’s documents.
IP was not required to complete the divestitures prior to its DS Smith acquisition closing. However, the EC stated that it had to approve a purchaser, which would occur in a separate procedure, and a trustee would monitor activity. IP is supposed to submit a proposal to the European Commission and trustee within one week of identifying an acquirer, according to commission’s documents.
The EC requires IP not to directly or indirectly reacquire any of the divested businesses for 10 years, unless the commission finds that the market has changed substantially. The commission also mandated that the purchaser already have a corrugated production footprint in the United Kingdom or European Economic Area.
Palm is a containerboard, graphic paper and corrugated packaging producer based in Aalen, Germany, with 4,200 employees, according to an IP press release. The company has five paper mills and 29 box plants across Europe, and reported 2 billion euros in revenue in 2024.
“Finding the right buyer for these five facilities has been a top priority for our team since the completion of the acquisition of DS Smith, and I'm pleased that we have found one in PALM,” International Paper CEO Andy Silvernail said in a statement Monday.
