International Paper Co., the world’s largest paper company, agreed to buy Weyerhaeuser Co.’s pulp business for about $2.2 billion to add production of the absorbent raw material used in diapers and other hygiene products.
Annual cost savings from the deal will be about $175 million by the end of 2018, Memphis-based International Paper said on May 2.
The company also expects to realize a $300 million tax benefit from the transaction.
"Weyerhaeuser’s pulp business has an outstanding customer base served from low-cost, well-run assets that complement our existing system and offers significant synergy opportunities," International Paper CEO Mark Sutton said.
The transaction, which is expected to close in the fourth quarter, will give International Paper five mills and two converting factories that produce fluff pulp, softwood pulp, and specialty pulp.
Federal Way, Washington-based Weyerhaeuser’s pulp business has about 1,900 workers in the U.S., Canada and Poland.