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Norske unfolds $2.5B deal
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April 3, 2000: 4:00 a.m. ET
Norske Skog to buy New Zealand's Fletcher Challenge Paper
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LONDON (CNNfn) - Norske Skogindustrier, Norway's largest forestry products firm, agreed Monday to pay NZ$5 billion ($2.5 billion) for the pulp and paper business of New Zealand's Fletcher Challenge, creating the world's second-biggest newsprint maker.
Norske Skog will pay NZ$2.50 a share in cash for Fletcher Challenge Paper (FCP) or about $775, a 47 percent premium over the New Zealand firm's Friday closing price. Norske will also assume about $1.66 billion of the unit's debt and fund the separation costs from the parent Fletcher company.
The deal is the third major acquisition this year in the global forestry industry after a double raid by Scandinavian firms on the U.S. market. In February Finnish-Swedish producer Stora Enso bought Consolidated Paper for $4.9 billion and Finland's UPM-Kymmene snapped up Champion International for $5.5 billion.
 Norske Skog said the deal will generate about $100 million in cost savings and plans to issue 1.5 billion crowns ($175 million) in new shares to help fund the acquisition.
Norske stock gained 75 percent last year as the company embarked on an aggressive expansion program, including buys in Latin America. Norske reported a net profit of 1.83 billion crowns last year on revenue of 18.05 billion. FCP generated revenue of $1.89 billion in 1999.
The company aims to complete the FCP deal by July, subject to shareholder and regulatory approval.
Norske shares fell 5 crowns to 320 crowns in Oslo trading Monday. 
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