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. Last Updated: 07/27/2016

Ilim, International Paper Team Up

NEW YORK -- Paper and packaging company International Paper said Friday it completed the formation of a 50-50 forest products joint venture with Ilim Holding, taking a 50 percent stake in Ilim Group for about $620 million.

The deal was first announced in August. Through cash from operations and additional debt the joint venture will invest about $1.5 billion in Ilim's four mills over about five years. This investment will upgrade equipment and increase production capacity .

The joint venture is part of a restructuring by International Paper that includes plant closures and sales, as well as increased stock buybacks, paying down debt and selling off non-core businesses.

The pulp and paper mill that International Paper currently owns and operates in Svetogorsk will not be owned by the joint venture and will continue to operate as part of IP's European Papers business. Similarly, Ilim Pulp's wood products businesses will not be integrated into the joint venture, but instead will be combined to create Russia's largest wood products holding company.

The joint venture formed a new board of directors, which includes four members each from Ilim and International Paper. Paul Herbert, former International Paper senior vice president, was named chief executive.