Paper Forecast — Consolidation Cuts Through

Foreign paper and board producers gobble up U.S. industry giants as the market continues to tighten for commercial printers.

Typically, activity in the paper industry is about as gripping as a documentary on fast-drying paints.

But during a two-week period in February, two of the biggest names in U.S. paper and board manufacturing paired off with large, foreign counterparts in one of the biggest consolidation waves in industry history. When the smoke cleared:

• UPM-Kymmene, of Finland, purchased Stamford, CT-based Champion International.
• Finnish-Swedish manufacturer Stora Enso acquired Chicago-based Consolidated Papers, less than a month after buying Norweigan paper wholesaler Carl Emil A/S.
• International Paper purchased Shorewood Packaging, headquartered in New York.
• Canadian giant Abitibi-Consolidated acquired Canadian Donohue.
• Smurfit-Stone Container, of Chicago, picked up St. Laurent Paperboard, of Quebec, in a takeover bid.

The quick and short answer behind the consolidation: low stock prices of U.S. companies and high stock values for foreign manufacturers looking to become global competitors, along with access to attractive raw material regions.