International Paper, a US based pulp and paper company, has signed an agreement to divest its corrugated packaging business to Xiamen Bridge Hexing Equity Investment Partnership Enterprise, for approximately $150m.
Under the terms of the deal, Xiamen will acquire International Paper's corrugated packaging business in China and Southeast Asia.
The firm's Asia corrugated packaging business has 18 plants, which employ approximately 3,000 people.
Planned to be completed in the next few months, the transaction is subject to satisfaction of closing conditions, including obtaining required governmental approvals.
In China, International Paper provides coated paper for products such as cigarette packages and coated board for packaging.
The Wall Street Journal cited the company's executives as saying earlier that the company finds no benefits to having local production in China since the raw materials are imported.
A letter of intent has been signed in 2015 by International Paper to sell its Chinese corrugated-packaging business to a potential buyer.
In 2015, International Paper agreed to sell its 55% equity interest in the joint venture (IP-Sun JV) to its Chinese coated board joint venture partner, Shandong Sun Holding Group for approximately $23m.
The deal is a part of International Paper's effort to reduce approximately $400m of outstanding debt.
International Paper chairman and CEO Mark Sutton said: "The Company remains committed to serving these very important markets, but concluded we could be more effective supplying this region with globally competitive products primarily through our Ilim joint venture in Russia and from the US."
