Back to top

Analyst Blog

Zacks Equity Research

KapStone Clears HSR Hurdle to Buy Longview

FBR RKT KS

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

KapStone Paper and Packaging Corporation (KS - Snapshot Report) has moved a step closer to acquire Longview Fibre Paper and Packaging, Inc., as the U.S. Federal Trade Commission (FTC) reduced the customary waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). However, the all-cash $1.025 billion acquisition now awaits the Federal Energy Regulatory Commission’s approval and is expected to close in the third quarter.

The HSR Act provides the FTC and the Department of Justice (DOJ) with relevant information about planned mergers and acquisitions. The information is provided to enquire about possible antitrust violations in order to propagate free and fair competitive practices. Under the Act, the parties are liable to wait before they can consummate the deal till the waiting period outlined in the HSR Act has passed, or the government has granted early termination of the waiting period.  

KapStone had inked a definitive agreement last month to acquire Longview Fibre to increase its presence in the containerboard market and strengthen its liquidity with strong free cash flow of the latter.

Located in Longview, Wash., in close proximity to several sea ports and with easy access to inter-state highways, Longview Fibre is a premier manufacturer of high quality containerboard, specialty Kraft papers and corrugated containers. Its facilities include a network of corrugated container plants in four Western states and a mill in Longview, which produces 1.15 million tons of containerboard and Kraft paper annually.

Manufacturing over 70 grades of Kraft paper and containerboard, Longview Fibre recorded net sales of $831 million in 2012, with an EBITDA of $118 million. Over the past several years, Longview Fibre has diligently increased its productivity with superior execution of its operating plans and benefiting largely from increased demand for containerboard and extensible Kraft paper. The acquisition is likely to be accretive to KapStone with immediate effect and is expected to transform it into a more profitable company with projected synergies of approximately $10 million within the first 18 months.

On the other hand, Longview Fibre anticipates leveraging KapStone’s expertise and global presence to better serve its own customers. In addition to a complementary product line, the merger also facilitates Longview Fibre to have a considerable presence in the corrugated container market in the U.S.

Founded in 2005 and headquartered in Northbrook, Ill, KapStone is a leading producer of unbleached Kraft paper and corrugated products. It is the parent company of KapStone Kraft Paper Corporation and KapStone Container Corporation, and operates three paper mills and 15 converting plants across the U.S. The company, which has a market cap of roughly $1.7 billion, offers products ranging from containerboard and Kraft paper to unbleached folding carton board products.

KapStone currently has a Zacks Rank #1 (Strong Buy).) Other stocks in the industry that look promising and are worth a look include Fibria Celulose SA (FBR - Snapshot Report), Klabin S.A. and Rock-Tenn Company (RKT - Analyst Report), each carrying a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%