STAMFORD, Conn. --International Paper Co. will sell its coated paper business to CMP Holdings LLC, an affiliate of Apollo Management, for $1.4 billion, the companies said Monday.
The deal includes the sale of four paper mills in Maine, Michigan and Minnesota.
International Paper, the world's largest paper company, has been selling millions of acres of forest and had said it wanted to sell some of its paper businesses as part of an effort to boost performance. First quarter earnings were down $1.2 billion.
The transaction, which requires regulator approval, is expected to close this summer. The coated paper business generated $1.6 billion in sales for International Paper in 2005, the company said.
The purchase price includes about $1.37 billion in cash and a 10 percent stake in CMP Investments, the parent company of CMP Holdings LLC. If CMP's return on the investment hits certain marks, International Paper would have the right to receive additional payments.
"This business has been an important contributor to International Paper, and we expect it will continue to thrive under new ownership," said John Faraci, International Paper's chairman and CEO.
The paper mills are located in Jay, Maine; Bucksport, Maine; Quinnesec, Mich.; and Sartell, Minn.