Weyerhaeuser to sell unit

MEMPHIS, TENN. — International Paper Co., a global supplier of packaging materials and uncoated paper, announced Monday that it was buying the container board unit of Weyerhaeuser Co. for $6 billion in cash.

Memphis-based International Paper said it would pay for the purchase through increased debt.

The company has greatly cut its debt and improved cash flow since launching a major reorganization in 2005 to move away from forest products and focus on producing uncoated paper and container board.

“This is just the exact reason we paid down $7 billion of debt a couple of years ago . . . to keep the financial flexibility so if something came along that was an opportunity for International Paper we could take advantage of it,” said John Faraci, the company’s chairman and chief executive.

The increased debt led Moody’s Investors Service to revise its outlook on International Paper to “negative” from “stable.”

But International Paper said the purchase would increase its market presence in the United States and Mexico for the company’s core products and boost profit over the long haul.

Weyerhaeuser, one of the world’s largest lumber and packing producers, said it planned to use part of the sale’s proceeds to pay down debt. The company had been considering a sale of the division as it looked to transition to more of a pure timber, wood products and real estate company.

The sale includes nine container board mills, 72 packaging locations, 10 specialty-packaging plants, four bag and sack locations, and 19 recycling plants.

Shares of Federal Way, Wash.-based Weyerhaeuser rose $1.09, or 1.8%, to $63.06. Shares of International Paper fell $2.79, or 8.7%, to $29.47.