IP Announces Plan to Divest 5 European Corrugated Box Plants

Core Viewpoint - International Paper (IP) is divesting five corrugated box plants in Europe to PALM Group, which is a strategic move to comply with European Commission requirements following its acquisition of DS Smith Plc [1][2]. Group 1: Transaction Details - The sale includes three plants in Normandy, France, one in Ovar, Portugal, and one in Bilbao, Spain [2]. - The transaction is pending approval from the European Commission and is expected to close by the end of Q2 2025 [1]. Group 2: Merger and Synergies - The merger between International Paper and DS Smith, finalized on January 31, 2025, aims to create a leader in sustainable packaging solutions [3]. - The expected pre-tax cash synergies from the acquisition have been revised from $514 million to a range of $600-$700 million, driven by strategic optimizations [4]. Group 3: Financial Projections - International Paper has updated its revenue target to approximately $27 billion for 2025, reflecting a 45% increase from $18.6 billion in 2024 [5]. - The company forecasts adjusted total EBITDA for 2025 to be between $3.5 billion and $4.0 billion, up from $1.99 billion in 2024 [5]. - For 2027, net sales are projected to be between $26 billion and $28 billion, indicating a compound annual growth rate (CAGR) of 13.2% from 2024 [6]. - Adjusted EBITDA for 2027 is expected to be in the range of $5.5 billion to $6 billion, suggesting a CAGR of 42.5% over the 2024-2027 period [7]. - Free cash flow guidance for 2027 is set at $2 billion to $2.5 billion, indicating a CAGR of 43.8% compared to 2024 [8]. Group 4: Industry Context - The industry is experiencing a surge in merger and acquisition activities as companies seek growth opportunities and enhance their packaging and sustainability offerings [9]. - Smurfit Westrock, formed by the merger of Smurfit Kappa and WestRock, reported net sales of $7.54 billion, benefiting from acquisitions and growth in corrugated volumes [10]. Group 5: Stock Performance - International Paper's shares have increased by 27.4% over the past year, outperforming the industry average growth of 13.7% [11].