International Paper (IP) was launched in 1898 when 18 northeastern pulp and paper firms consolidated to reduce costs. Growth was not rapid in much of the 1900s, although the firm acquired a number of small, related businesses. Following some diversification in the 1960s and 1970s, IP began to refocus its efforts on paper and pulp. In the 1980s and 1990s, IP embarked on a series of key acquisitions, including office paper provider Hammermill Paper, paper manufacturer Arvey, composite wood products firm Masonite, and paper products firm Federal Paper.

IP engaged in a restructuring effort after a loss in 1997. The firm sold $1 billion in assets and trimmed its workforce by about 10%. The following year, IP acquired Weston Paper &

Manufacturing and Mead’s distribution business. In 1999, IP acquired rival Union Camp for

$7.9 billion.

The acquisitions continued in 2000 when IP bought Shorewood Packaging for $850 million and Champion International for $9.6 billion. Interestingly, the firm restructured again in 2001, trimming another 10% of its workforce. In 2003, IP began an effort to sell about 17% of its timberland—
about 1.5 million acres—to improve its financial position.
At first glance, IP’s myriad of acquisitions and divestments over the past decade may be difficult to comprehend. Divestitures alone between 2000 and 2002 totaled about $3 billion.
However, a closer look reveals that IP has been aggressively acquiring businesses that support its core paper, packaging, and forest products focus, while divesting of businesses that may only have been tangentially related.
Today, IP is the world’s largest forest products company. IP is involved in a full array of production of printing and writing papers, pulp, tissue, paperboard, packaging, plywood, and other wood products. IP also processes forest products including pine lumber, engineered wood, laminates, and particleboard. Approximately three quarters of revenues are distributed somewhat evenly among paper packaging, paper distribution, and printing papers.
IP has a number of international holdings including Papeteries de France, Scaldia in the Netherlands, and Impap in Poland. In addition, the firm controls about 9 million acres of forest in the United States and 900,000 acres in Brazil and Russia. In 2006, IP announced a job venture with Ilim Pulp, Russia’s leading forestry products supplier. IP acquired Asian packaging firm Svenska Cellulosa in 2010, facilitating greater expansion into China. IP acquired U.S.-based Temple-Inland in 2012, enabling the firm to expand its packaging operations in North America.

Case Challenges
1. During the past several years, IP has engaged in both rapid acquisition of highly related businesses and divestment of less related or unrelated businesses. Has this been an effective strategy?
2. Are economies of scale essential for firms in the forestry products industry?
3. What types of political or publicity problems associated with environmental concerns could IP face in the future?