International Paper revealed on Thursday its plan to sell the worldwide cellulose fiber division for $1.5 billion, as it aims to prioritize sustainable packaging solutions.
The division of International Paper that manufactures cellulose for products like tissues and diapers is set to be acquired by American Industrial Partners, a private equity firm. The transaction is expected to be finalized by the end of the year, as announced on Thursday.
The International Paper Board announced in October that it would explore other options for its worldwide cellulose business, which includes 3,300 employees and 9 factories, and had a revenue of US$ 2.8 billion in 2024.
International Paper has recently made adjustments in its packaging division in North America, resulting in a decrease of approximately one million tons in the company’s annual paperboard production capacity for packaging materials like boxes.
The Savannah and Riceboro factories in Georgia will shut down gradually by the end of September. In contrast, a $250 million investment in an Alabama plant to manufacture paperboard for packaging is anticipated to be finished by the third quarter of 2026.
Around 1,100 employees are expected to be affected by the changes, according to International Paper leadership.
International Paper is placing emphasis on becoming more efficient.
Packaging companies have focused on becoming more efficient due to tight profit margins caused by high operating costs in older factories and reduced demand amid tariff uncertainty, leading to decreased spending by companies and consumers.
International Paper stated last month that the daily delivery of boxes to the U.S. decreased by 5% in the second quarter compared to the previous year.
International Paper is shifting towards a strategy focused on value rather than volume, as stated by analysts Richard Bourke and Ryan Fox from Bloomberg Intelligence.
” Although difficult, these decisions are essential to position International Paper for long-term success, allowing us to focus on regions, customers and products where we can create more value,” said Tom Hamic, president of the International Paper Packaging Solutions division in North America.
