International Paper (IP) has been making news on several fronts. The company made an unsolicited tender offer for a competitor (it later won), management has boosted the dividend significantly, and one division has been merged with a rival to boost international sales exposure.
International Paper is a global producer of paper and packaging products. The company owns more than 250 pulp, paper, and packaging plants around the world, with about half the plants in the United States and the balance in South America, Asia, and Europe. International segments its business lines into the divisions of industrial packaging, printing papers, consumer packaging, and a distribution company called Xpedx.
For the second quarter of 2011, International Paper reported earnings per share of continuing operations of 80 cents, up from 74 cents in the first quarter and 42 cents a year earlier. The profit gain was on 8 percent higher year over year revenues. The IP earnings release breaks out the earnings from continuing operations and charges or credits from special items. Unfortunately, the company seems to have special items charges or credits almost every quarter.
Starting in May 2010, the board started increasing the dividend payout. The distribution is now 26.25 cents per share quarterly from 3 cents in early 2010.
Bidding to grow
In June 2011, International Paper made an unsolicited offer for rival Temple Inland (TIN). The Temple Inland board of directors rejected the $30.66 per share ($3 billion) offer. International Paper later sealed the deal at $32 per share in cash and the assumption of $600 million in TIN debt, valuing the company at $4.3 billion.
Another completed transaction combines Shorewood Packaging, owned by International Paper, with AGI World, which is owned by Atlas Holdings, into a combined specialty packaging company. Atlas Holdings will own 100 percent of the new company's U.S. operations and International Paper will have 40 percent of the international business.
IP is highly favored by the Wall Street analysts. Recent reports from RBC Capital Markets, Deutsche Bank, and Longbow Research reiterate buy or outperform ratings. The company reports next on Oct. 27.
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