Clearwater Paper Corporation ( CLW ) shares are trading higher after the company inked a deal to sell its tissue business to Sofidel America Corporation for $1.06 billion, subject to adjustments for debt, cash, transaction expenses, and net working capital.

The price is about six times the tissue segment’s Adjusted EBITDA for the 12 months ending March.

The transaction represents the next step in Clearwater Paper’s transformation to become a premier independent supplier of paperboard to North American converters and the conclusion of its previously announced review of strategic options for the tissue business.

The deal is expected to close in late 2024, pending standard conditions. The company anticipates net proceeds of around $850 million from the sale, which will be used to significantly reduce debt and fund growth initiatives for its ongoing operations. As of March-end, Clearwater had a net debt of $392.9 million.

Arsen Kitch, President and Chief Executive Officer, said, “Clearwater Paper is transforming into a premier paper supplier in North America. Upon completion of this transaction, we intend to deleverage our balance sheet while scaling and diversifying our paperboard business to meet the needs of our customers.”

The company will announce it will report its second-quarter 2024 results on August 6, 2024.

Investors can gain exposure to the stock via Invesco S&P Smallcap 600 Pure Value ETF ( RZV ) and First Trust DJ Select MicroCap ETF .

Price Action: CLW shares are up 9.66% at $53.65 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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