Are Wausau Shareholders Getting Enough in the Buyout?

Companies and Brands

Published: October 13, 2015 1:25 pm

Last Updated: October 13, 2015 1:28 pm

Wausau Paper Corp. (NYSE: WPP) was one of the top bulls in Tuesday’s session on news of an acquisition. The company entered into an agreement to be acquired by SCA for the price of $10.25 per share, which would be a total consideration of $513 million.

Both boards of directors have unanimously approved the merger. However this is still subject to shareholder and regulatory approval. The transaction is expected to close in the first quarter of 2016.

The acquisition is expected to generate annual synergies amounting to approximately $40 million, with full effect three years after closing. Consensus estimates pegged Wausau’s expected revenue for the 2015 full year around $370 million.

Through this transaction, SCA is looking to benefit customers by providing access to the superior sales, service, innovation and logistics that the combined business can provide, by expanding SCA’s premium tissue and washroom assortment. Essentially, SCA is offering customers a “one-stop shop” for all professional hygiene needs through this acquisition.

The merger consideration represents a premium of 40.6% to Wausau Paper’s closing price on Monday and a premium of 11.3% to the Wausau Paper 52-week volume-weighted average price.

Magnus Groth, president and CEO of SCA, commented on the acquisition:

SCA is the world leading supplier of Away-from-Home tissue with the global brand Tork. The acquisition of Wausau Paper is an excellent strategic fit and strengthens our presence in North America. The Wausau Paper product portfolio complements SCA’s offerings in North America and gives us access to premium tissue in that region. We expect the acquisition to generate benefits for SCA and our customers.

Michael C. Burandt, chairman and CEO of Wausau, said:

Our Board has undertaken a thorough process to explore all of Wausau Paper’s options and has determined SCA’s offer creates substantial value and is in the best interests of the company and its shareholders. This transaction is a testament to our talented team of employees and the strong, focused company that they have worked to create. Our customers will benefit from expanded products and services from a company that shares similar values around customer service and sustainability.

Shares of Wausau were up 39% at $10.14 on Tuesday afternoon. The stock has a consensus analyst price target of $9.75 and a 52-week trading range of $6.36 to $11.52.

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