As we sent out to Activist Strategy subs last week, MLPs got hot for a while in 2015, with the one underrated part of this excitement being rooted in the paper and containerboard industry.
This all came about from the 2014 thesis of Perry Capital, the idea was that the paper companies could convert their asset into an MLP structure. Perry called out International Paper, Rock-Tenn and Kapstone Paper. But things haven’t gone as planned.
Kapstone Paper shares are down 5% over the last year. International Paper is up a mere 12% over the same period. Rock-Tenn is the standout, up 32% last year, thanks to its pending merger with MeadWestvaco Corp. Recall that Starboard Value went active at MWV in mid-2014.
Following the announced MeadWestvaco-Rock-Tenn merger, you have to believe that International Paper is on the prowl for acquisitions activity this year. There’s an obvious pick there that has an activist that might get involved to push the company to shop itself or merge...
Then, beyond that, there’s also an underrated player in the paper industry, Wausau Paper. It’s riddled with activist investors. It does have a major activist involved, but two other activists in Wausau is Altai Capital and LionEye Capital.
Not to cop out, but it really is a pure-play on the tissue business that seems like a perfect roll-up opportunity, and a digestible one that that, with a $700mm enterprise value.
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