Verso Paper Corp. will acquire NewPage Holdings Inc. in an agreement valued at $1.4 billion, according to a joint release Monday from the companies.
When the deal between Verso, which produces coated papers, and NewPage, which produces printing and specialty papers, is done, the combined company will have 11 manufacturing facilities in six states - including the NewPage paper mill in Wickliffe - and expects to have sales of about $4.5 billion, according to the release.
The companies expect the deal, which was unanimously approved by their boards of directors, to close in the latter half of this year.
Kelly Davis, a representative from the Wickliffe NewPage mill, said the Ballard plant employs about 435 of the company's approximately 5,500 workers. Of those, about 315 are union and about 120 are salary employees.
Davis said no decisions have been made regarding jobs because it's so early in the process.
"We believe this agreement with Verso represents the best way forward for our stakeholders... Together we [Verso and NewPage] will have increased manufacturing efficiency, greater flexibility and an even more solid and capable platform," NewPage President and C.E.O. George F. Martin said in Monday's statement.
Verso President and C.E.O. David J. Paterson said the acquisition will help the company face increased competition from online sources and better serve its customers.
Before the deal closes, the companies' respective leaders will continue in their current roles. When the deal closes, Paterson will lead the combined organization, a NewPage director will join the Verso board of directors, and a team of representatives from both companies will lead integration efforts, according to the release.
The companies expect the deal will result in a minimum pre-tax cost savings of $175 million within the first 18 months after the transaction is completed.
The agreement includes a cash and debt consideration for NewPage equity holders totaling $900 million - $250 million in cash and $650 million of new Verso lien notes issued at closing - as well as shares of Verso common stock representing 20 percent of outstanding shares immediately before closing, which could be adjusted to as much as 25 percent under certain circumstances.
Verso will finance the deal through $750 million in committed financing, which the release states will be used to pay the cash portion of the merger consideration and to refinance NewPage's existing $500 million term loan prior to closing.
The Associated Press reported Monday that shares of Verso Paper Corp. rose from $1.25 to $1.90 in midday trading.