International Paper Company IP recently announced its intentions to divest the Carolina coated bristols brand to MeadWestvaco Corporation MWV for an undisclosed amount.
The strategic move is aimed to divest non-core assets that no longer fit the corporate strategy and invest in other lucrative business opportunities. The decision to sell the Carolina brand is also backed by the intention to convert its Riegelwood N.C. Mill to 100% fluff and softwood pulp production. An additional investment of $135 million will result in adding an incremental 400,000 tons of capacity to expand fluff production along with the conversion. Post-conversion of the Mill, the company will have the capacity to produce up to 1.4 million tons of high-quality fluff annually.
As a result of the mill conversion, International Paper is expected to reduce its coated paperboard capacity by 350,000 tons. The investment at Riegelwood Mill positions International Paper to serve its customers in the growing global fluff pulp market. The demand for Fluff pulp is expected to grow at an annual rate of 3% to 4% globally due to its use in a variety of applications.
Headquartered in Memphis, TN, International Paper is a global paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia, and North Africa. It is one of the world's leading producers of containerboards used to make corrugated brown boxes for shipping goods. International Paper intends to focus more resources on high-return capital projects within its core businesses that can drive additional earnings growth.
International Paper currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Mercer International Inc MERC, carrying a Zacks Rank #1 (Strong Buy), and Resolute Forest Products Inc. RFP, carrying a Zacks Rank #2 (Buy).
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