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Newsprint producers Abitibi, Stone-Consolidated in merger talks

February 14, 1997

TORONTO (AP) _ Abitibi-Price Inc., the world’s largest newsprint producer, is holding talks with competitor Stone-Consolidated Corp. about a merger that could be worth $1.5 billion or more.

``There is no assurance that a deal will be reached,″ the companies cautioned in a statement Friday. Nevertheless, falling paper prices are squeezing profits industrywide, producing the kind of environment that often drives companies to combine in the hopes of operating more efficiently.

Newsprint prices rose sharply from mid-1994 through the end of 1995 _ 40 percent in 1995 alone _ forcing many newspaper publishers to cut costs. Since their peak in early 1996, they have fallen by about one-third.

The industry runs in cycles, so analysts assume prices will remain at current levels, or perhaps fall further, until the next upturn begins.

Neither newsprint maker provided details about the possible merger or when it might happen. Both have market values of about $1.5 billion, suggesting any merger would have to be valued at that level or higher.

Abitibi-Price, which is based in Toronto, makes paper at 10 mills in North America and sells it around the world. It is also a major distributor of office products in North America and Western Europe.

Stone-Consolidated of Montreal, also one of the biggest newsprint producers, is a leading supplier of paper and wood products with operations in Canada, the United States and Britain. Stone Container Corp. of Chicago owns 47 percent of its stock.

At Abitibi-Price’s annual meeting in April, president Ronald Y. Oberlander said there were too many companies dividing the market. That triggered speculation Abitibi might be looking to merge.

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