March 21 Wausau Paper Corp said it
intends to sell its specialty paper business to funds controlled
by private equity firm KPS Capital Partners LP for about $130
million in cash, following pressure from activist investor
Starboard Value LP.
KPS Capital would set up a new company to acquire Wausau's
Rhinelander and Mosinee mills in Wisconsin.
The New York-based private equity firm also signed a
separate letter of intent to buy another company and combine its
specialty business with the Wausau assets.
Hedge fund Starboard, Wausau's largest shareholder with a
14.80 percent stake, urged the paper products maker in January
last year to sell its paper segment or itself and demanded a
board reorganization. The company earlier this month agreed to
nominate two members recommended by Starboard to its board.
The specialty business, Wausau's biggest source of revenue
in 2011, makes paper for food packaging, labels and writing.
Wausau, which will now concentrate on its tissue business,
has an option to own up to 25 percent of the new company. It can
scale that up by another 5 percent, depending on the new
company's performance, Wausau said.
Contribution of "green" tissue products to sales rose to 54
percent in 2012, from 34 percent five years ago, the company
said in its fourth-quarter earnings release.
The Mosinee, Wisconsin-based company said in February it
would shut its specialty paper mill in Brainerd, Minnesota, in
the second quarter of this year. The company sold its print and
color paper brands last year.
Shares of the company closed at $10.31 on the New York Stock
Exchange on Thursday.