International Paper bets big on fluff pulp; company to spend $2.2 billion buying Weyerhaeuser pulp business
(Memphis, USA, May 11, 2016) International Paper’s latest deal reflects demand for diapers, feminine products.
International Paper Co. agreed to buy Weyerhaeuser Co.’s pulp business for $2.2 billion, making a big bet on rising global demand for disposable diapers and feminine products.
Mark Sutton, International Paper’s chief executive, said in an interview the company believes more consumers will be able to afford disposable diapers in the coming years in emerging markets, including in China, which recently ended its one-child policy for couples. At the same time, he added, purchases of diapers to combat adult incontinence should rise as populations grow older in many countries.
The deal will allow International Paper, a corrugated packaging giant, to surpass Georgia-Pacific LLC as the world’s largest manufacturer in the roughly $6 billion fluff pulp market. International Paper is acquiring five pulp mills, two converting facilities and roughly $1.5 billion in sales from Weyerhaeuser.
Fluff pulp is the soft, white absorbent used in diapers, tampons and some medical bandages. It is made from the loblolly pine, a fast-growing tree that thrives in the U.S. South. Global demand has been growing by roughly 3% to 4% in recent years.
Weyerhaeuser had a 24% share of the fluff pulp market last year, behind Georgia-Pacific’s 28% share but ahead of International Paper’s 18%, according to industry researcher RISI, which estimates demand will rise 4% annually through 2019. (Source: press release)