Pactiv Evergreen Inc. of Lake Forest, Illinois, has announced a $110 million deal to sell its paper mill in Pine Bluff and extrusion facility in Waynesville, North Carolina, to Brazil-based paper and pulp producer Suzano S.A.
The transaction is expected to close in the fourth quarter of 2024.
In a news release, publicly traded Pactiv said Suzano has agreed to offer employment to current employees at the Pine Bluff and Waynesville facilities.
The Pine Bluff mill employs about 1,000 people, according to Matthew Pelkki, director of the Arkansas Center for Forest Business. The mill produces liquid packaging board and cupstock used to make fresh beverage cartons, paper cups and other fiber-based food and beverage packaging. Waynesville provides incremental extrusion capacity for the board produced at Pine Bluff.
Pactiv and Suzano have also agreed to enter into a long-term supply arrangement at the closing of the transaction. Under the agreement, Suzano would use the Pine Bluff and Waynesville facilities to supply liquid packaging board to Pactiv’s converting business.
Michael King, president and CEO of Pactiv, said the sale concludes a “strategic alternatives review process” aimed at restructuring the company’s beverage merchandising operations. The review led to the closure of Pactiv’s mill in Canton, North Carolina, and its converting facility in Olmsted Falls, Ohio, last year.
The company last year also reorganized its management structure by combining its beverage merchandising and food merchandising businesses.
In a statement, King said the sale of the Pine Bluff and Waynesville facilities “is consistent with our disciplined focus on value creation, and we expect it to reduce the capital intensity of our business, improve our cash flow profile and further strengthen our balance sheet.”
He continued: “We put considerable thought into positioning Pine Bluff and Waynesville for the future and believe this Agreement serves the best interests of our stakeholders and our local communities. I want to thank our Pine Bluff and Waynesville employees for their significant contributions to Pactiv Evergreen and continued dedication to our customers.”
Pactiv reported $10 million in first-quarter net income, swinging to profitability after posting a loss of $133 million in the same quarter last year.
According to Pelkki, the Pine Bluff mill ships about $900 million worth of products annually. The mill consumes about 800,000 tons of pine pulpwood trees each year, for which landowners in the region receive nearly $2 million in payments.
The mill supports a total of 3,841 jobs in the region, including loggers and truck drivers.
Pelkki believes that Suzano is looking for entry into the U.S. market and that the company plans to operate the mill long-term. Still, questions about the mill’s future remain.
“We don’t know how Suzano will manage the mill, but I would expect that the product mix won’t change substantially,” Pelkki said. “However, the source of wood fiber might be changed from domestic loblolly pine to Brazilian-grown eucalyptus, then the volume of small diameter pulpwood would be greatly reduced in the region. This would reduce payments to forest landowners and also make it more difficult for landowners to maintain healthy forests by thinning out small trees. It would also mean a loss of logging and trucking jobs in the region.”
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