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Packaging companies await regulatory approval of merger

Two paper and corrugated packaging companies have been in talks over whether to join forces for almost half a year, and now the deal is nearer to closing. The merger in question is between Memphis-based International Paper Co. and Texas-based Temple-Inland. Although a draft deal has been reached, it still needs review by the Justice Department for the transaction to be complete. The Justice Department recently announced that an additional month will be used to extend the review period until Jan. 27.

International Paper Co. has been attempting the takeover for some time. An original deal was offered in June 2011, with a takeover offer to Temple-Inland of over $3 billion. This initial deal was rebuffed by Temple-Inland with a statement that the deal "grossly undervalues" the company.

International Paper Co. then threatened to take the deal directly to the shareholders in July, but the deal was rebuffed again. In September a new amount was offered at more than $4 billion, and the deal was approved by the Temple-Inland board. Details of the merger include International Paper Co. buying all of Texas-based Temple-Inland's outstanding shares at $32 per in cash, and also assuming Temple-Inland's $600 million year-end debt.

The two companies have recently agreed to extend the Justice Department review period. This review was expected to conclude before 2012. A spokesperson for International Paper Co. indicated that there should not be too much read into the extension, as such a move is not uncommon for merging entities. Regulatory approval is the final step for these companies before the transaction is finished. If approved, this deal will secure International Paper Co. as the nation's leader in corrugated packaging.

Source: commercialappeal.com, "Justice Department review of International Paper merger delayed by one month," Toby Sells, Dec. 19, 2011