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International Paper CEO John Faraci on the benefits of the company’s deal to acquire Temple Inland.
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-- -- bull -- -- looks like it's going to be a whole lot of Paper as International Paper announces a definitive agreement to acquire.
Packaging make a Temple-Inland for 32 bucks a share in cash.
Joining us now to talk about the big deal is International -- CEO John.
Faraci.
John thank you so much for joining us several congratulations and -- the actually yeah thank you and all this a big day for you what did you what makes sense about this deal.
Well -- this strategic industrial logic for International Paper -- corrugated packaging business in US and in a good strong -- like Temple-Inland is always been there.
Because that's really our focus on global Paper and packaging and this had to be a transaction that made sense for temples -- -- made sense International -- shop owners.
At the end of the day the boards of both companies concluded that it did.
By it would be written off -- for thirty dollars sixty cents a share that was up to goody two dollars and still think it's good value obviously.
Absolutely we thought this was a good value.
At thirty dollars this year we did due diligence.
We you've got a chance to talk of -- people to look at some of the it data some of the assumptions we made -- correct some need to be adjusted bit.
This is a very compelling -- Acquisitions International Paper secretive in -- one is gonna cost to capital returns and don't generate a lot of cash.
With regard to Temple-Inland Europe also taking on sucks 600 million dollars I believe it is in debt there's some lawsuits out there one involving.
Guarantee Banc trust bank down in a Texas.
Mom does any of that concern dealing -- -- big factor when you looked over the books.
The balance sheet in the debt was not we.
International -- pay down one bit of that lesson we years we've -- the rating agencies we have the debt repayment program that's.
Could it enable us to rapidly pay down the debt we're gonna bring -- and have dollars in cash to the closing.
So this is not a levering up transaction.
With regard to the bank issue -- -- very seriously.
We put some subject matter experts in -- decided it was not you know we're not -- the banking business.
Temple had disclose the possibility of velocity or on the bank that also express and review what they thought.
The the ultimate economic impact was we former her own view factor that into our valuation.
And fell to 32 dollars was very appropriate and conservative did that -- buster and a good return for -- -- -- Does this acquisition mean that you're bullish about US birth and global growth or assistance another company that you could get on the cheap because.
You know -- a lot of Wall Street firms are handicapping the odds of a double dip recession some say 33% one of three.
And a Credit Suisse says one in five and -- you know OCC the stock market investors are acting like a big game of shoots and ladders to try to jump out of the market right now.
Is that how do you feel about -- do you feel like this is a bullish sign.
On your behalf that the US economy and global economy.
A could be on the -- Well this is an investment in a in a business are already and and its investment and cost reduction opportunity.
To improve the efficiency of both businesses.
The corrugated packaging business we believe this one is gonna do near the economy in terms of demand and it's hard be bullish near term.
On what the demand signals are right now because GDP growth this summer between 01% so.
And I wouldn't say it it's a bullish that on the economy but it's a realistic that.
Are realistic investment.
And in a business -- and we know very well.
That we have been successful and even in today's environment -- this enables us to be more successful going forward in.
The withstand some of the competitive pressures that are obviously there in a tough economic environment.
And good afternoon what is what is your industry think about the migration to clean tech mean I think about papers recyclable.
-- has a shelf life it can decompose what what's your view.
In your company in the context of adopting clean technology.
Which this might be.
Like I look at.
If you think about.
You think about forest products industry -- you where one of the greenest industries out there we we start with the renewable.
Natural resource.
Where the biggest collector International Paper Greenfield bio mass.
In the country -- one of the biggest users of biomass in the country.
And we generated close to 70% her own power so when I hear people talk -- a Green jobs I think the forest products industry and International Paper being the largest company.
In the forest products industry is really the poster industry.
For Green jobs and recycling and -- new ability in sustainability.
Job -- -- a time very quickly I want to.
-- -- about redundancy with these two companies coming together -- will -- be jobs lost.
There will be some but by foreign away the biggest levers that you know will be working on.
To take costs out of the combined companies.
Are in areas like logistics.
Purchasing.
Scheduling it at facilities where we can scheduled products to run all the time on one machine is supposed to many machines.
They're big economic improvements there and those really efficiencies that customers don't want to pay for and don't pay for.
And enables us to make India more efficient company.
While International -- CEO John Faraci John congratulations and thanks for joining us today we really a --
