One Rock Capital Partners LLC is buying North Pacific Paper Co. from Weyerhaeuser Co. (NYSE: WY), as operators of paper mills have become vulnerable during the on-going transition to digital media.
Weyerhaeuser, which owns 13 million acres of timberlands, primarily in the U.S., and manages additional timberlands under long-term licenses in Canada, has been engaged in a strategic review of its cellulose fibers business since November 2015. The timberland owner, based in Federal Way, Washington, completed the acquisition of Plum Creek Timber Company Inc. in February 2016.
In keeping with the strategic review process, Weyerhaeuser has been shedding assets to pay down debt and focus on wood products. In May, the company announced an agreement to sell its cellulose fibers pulp mills to International Paper for $2.2 billion in cash. The deal included five pulp mills and two modified fiber mills. In June, Weyerhaeuser announced an agreement to sell its liquid packaging board business to Nippon Paper Industries Co., Ltd. for $285 million in cash.
“Our businesses delivered solid second quarter operating results, with wood products capitalizing on improving markets and ongoing operational excellence initiatives to report its strongest quarter in over a decade,” said CEO Doyle Simons in the company’s Aug. 5 second-quarter earnings release.
North Pacific Paper manufactures and sells paper to publishers, newspapers and commercial printers. The business has a six-acre production facility in Longview, Washington, which includes a thermo-mechanical pulp sawmill, used for separating fibers in papermaking.
Headquartered in New York and Los Angeles, One Rock is a middle-market private equity firm with more than $430 million in assets under management. The firm, in a strategic partnership with Mitsubishi Corp. (TYO:8058) and its varying business operations, looks to make majority stake investments in North American companies specializing in: chemicals and process industries that include paper and forestry businesses, manufacturing and healthcare products, business and environmental services, and auto retail. The firm’s strategy includes using experienced operating partners to identify, acquire and enhance businesses.
In June, One Rock announced the sale of Compass Chemical International LLC, which makes chemicals used in water treatment, oil and gas, to Italmatch Chemicals Group (“Italmatch”), a maker of performance additives for lubricants, water treatment and oil & plastics.
One Rock’s purchase of North Pacific Paper is expected to close by the end of 2016. Moelis & Co. (NYSE: MC) acted as financial adviser to Weyerhaeuser.