Barclays on U.S. Paper & Forest Products: Cascades To Boost U.S. Containerboard Supply by 1.5% by 2013
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Rating Summary:
1 Buy, 5 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 8 | New: 10
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Barclays on U.S. Paper & Forest Products: Cascades To Boost U.S. Containerboard Supply by 1.5% by 2013
Barclays analyst, Peter Ruschmeier, said, "Cascades to build 540K short ton recycled linerboard mill. Yesterday (6/27), Canadian producer Cascades announced plans to invest $430 MM to build one of the world's largest containerboard machines. The one-machine expansion will provide 540K short tons of recycled linerboard capacity in Niagara Falls, N.Y. The machine is expected to come on stream during the summer of 2013. The mill has capacity equivalent to 1.5% of current U.S. containerboard supply. The mill will produce lightweight linerboard using old corrugated containers (OCC) as a raw material."
"Cascades mill expansion likely to be viewed as modest negative for containerboard producers. We view the Cascades announcement as a modest negative for containerboard producers such as International Paper, Temple-Inland (NYSE: TIN), Rock Tenn, Packaging Corp. (NYSE: PKG), Kapstone (NYSE: KS), and Boise (NYSE: BZ). As it relates to Int'l Paper's (NYSE: IP) $30.60 per share hostile bid for Temple-Inland, bad news for containerboard markets is likely a modest positive for IP's goal of minimizing the price it offers for TIN. However, given the timing of the capacity expansion, we believe it will have limited impact on the IP/TIN negotiation. We maintain our view that IP is likely to prevail in its attempt to buy TIN, but likely in a price range between $37 and $41 per share, in our view."
Barclays analyst, Peter Ruschmeier, said, "Cascades to build 540K short ton recycled linerboard mill. Yesterday (6/27), Canadian producer Cascades announced plans to invest $430 MM to build one of the world's largest containerboard machines. The one-machine expansion will provide 540K short tons of recycled linerboard capacity in Niagara Falls, N.Y. The machine is expected to come on stream during the summer of 2013. The mill has capacity equivalent to 1.5% of current U.S. containerboard supply. The mill will produce lightweight linerboard using old corrugated containers (OCC) as a raw material."
"Cascades mill expansion likely to be viewed as modest negative for containerboard producers. We view the Cascades announcement as a modest negative for containerboard producers such as International Paper, Temple-Inland (NYSE: TIN), Rock Tenn, Packaging Corp. (NYSE: PKG), Kapstone (NYSE: KS), and Boise (NYSE: BZ). As it relates to Int'l Paper's (NYSE: IP) $30.60 per share hostile bid for Temple-Inland, bad news for containerboard markets is likely a modest positive for IP's goal of minimizing the price it offers for TIN. However, given the timing of the capacity expansion, we believe it will have limited impact on the IP/TIN negotiation. We maintain our view that IP is likely to prevail in its attempt to buy TIN, but likely in a price range between $37 and $41 per share, in our view."
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