Verso Swings $1.4B Deal for Specialty Paper Co. NewPage
Private equity-backed coated papers producer Verso Paper Corp. will buy NewPage Holdings Inc., a maker of printing and specialty paper, in a $1.4 billion deal that allows the companies to better respond to global competition, the companies announced Monday.
The combination of Memphis, Tenn.-based Verso, a portfolio company of New York private equity firm Apollo Global Management LLC, and Ohio-based NewPage will create a paper manufacturing powerhouse with sales of approximately $4.5 billion and 11 manufacturing plants in six states.
The $1.4 billion deal is composed of a cash consideration, $650 million of new Verso first lien notes, Verso common stock and the refinancing of NewPage’s $500 million term loan.
Verso President and CEO David Paterson, who will lead the combined company, said that the buyout will put Verso in a better position to face increased global competition.
“We continue to face increased competition from electronic substitution for print and international producers, but as a larger, more efficient organization with a sustainable capital structure, we will be better positioned to compete effectively and deliver solid results despite the industry's continuing challenges,” Paterson said in a statement Monday. “Furthermore, we believe the transaction provides stakeholders in both companies with meaningful, compelling value.”
NewPage President and CEO George F. Martin agreed, saying that the agreement represents the best way forward for stakeholders.
“A combined Verso and NewPage will be able to achieve greater efficiencies, which will enable it to serve clients with a high level of product quality and innovation,” Martin said in a statement Monday. “Together we will have increased manufacturing efficiency, greater flexibility and an even more solid and capable platform.”
Under the terms of the transaction, NewPage's equity holders will receive total cash and debt consideration of $900 million, consisting of $250 million in cash — most of which will be paid to the stockholders as a special dividend before closing and the remainder of which will be paid at closing — and $650 million of new Verso first lien notes to be issued at closing.
NewPage's equity holders also will receive shares of Verso common stock representing 20 percent, which is subject to a potential adjustment up to 25 percent under certain circumstances, of outstanding shares right before closing.
Certain NewPage stockholders owning a majority of the outstanding shares of NewPage common stock have agreed to vote their shares in favor of the approval of the transaction, according to the company.
Verso will finance the acquisition through $750 million in committed financing, which will be used to pay the cash portion of the deal and to refinance NewPage's existing $500 million term loan.
The deal has been unanimously approved by the boards of directors of both companies and it is expected to close in the second half of the year, subject to regulatory approvals.
Apollo and Verso are represented by Taurie Zeitzer, Joshua Kogan, David Beller and David Rosenthal of Kirkland & Ellis LLP, Morgan Lewis & Bockius LLP and Paul Weiss Rifkind Wharton & Garrison LLP.
NewPage is represented by Joseph Frumkin, Melissa Sawyer, Donald Klimoski, Jordan Oreck, Robert Buckholz, Julian Wright, Daryl Libow, Joseph Matelis, Brooke Mickelson, Mehdi Ansari, Stephen Miller, Matthew Friestedt, Henrik Patel, Michael Applebaum, Matthew Brennan, Ronald Creamer and Guy Inbar of Sullivan & Cromwell LLP.
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