Verso Paper Corp. plans to buy Ohio-based NewPage Holdings Inc. for $1.4 billion in an effort to create a stronger, more globally competitive coated-paper-based business to serve customers, the two companies announced in a news release Monday.

NewPage has seven paper mills in the United States, including one in Rumford. The Tennessee-based Verso has four mills, including facilities in Jay and Bucksport.

The deal is expected to close during the second half of this year, subject to regulatory approvals.

The board of directors of both companies have unanimously approved the transaction, according to the release.

NewPage announced last year that it would be shutting down a paper machine, which is expected to result in dozens of workers being laid off.

Both companies are leading producers of printing and specialty papers.

“There are no plans to close any mills,” Verso spokesman Jonathan Gasthalter said.

The combined company will have sales of approximately $4.5 billion and 11 manufacturing facilities in six states, the release states.

NewPage rejected a merger with Verso in July 2012. At the time, NewPage reported it did not intend to merge with Verso, nor did it anticipate further discussions about the proposal. NewPage emerged from Chapter 11 bankruptcy protection in late 2012.

“The combination of Verso and NewPage will create a stronger business that is better positioned to serve our customers and compete in a competitive global marketplace,” David J. Paterson, Verso president and chief executive officer, said in Monday’s release. “We continue to face increased competition from electronic substitution for print and international producers, but as a larger, more efficient organization with a sustainable capital structure, we will be better positioned to compete effectively and deliver solid results despite the industry’s continuing challenges,” he said.

“Furthermore, we believe the transaction provides stakeholders in both companies with meaningful, compelling value,” Paterson said.

“We believe this agreement with Verso represents the best way forward for our stakeholders,” George F. Martin, NewPage president and CEO, said. “A combined Verso and NewPage will be able to achieve greater efficiencies, which will enable it to serve clients with a high level of product quality and innovation. Together we will have increased manufacturing efficiency, greater flexibility and an even more solid and capable platform.”

Under the terms of the transaction, NewPage’s equity holders will receive total cash and debt consideration of $900 million, consisting of $250 million in cash, most of which will be paid to the stockholders as a special dividend prior to closing and the remainder of which will be paid at closing, and $650 million of new Verso first lien notes to be issued at closing.

NewPage’s equity holders also will receive shares of Verso common stock representing 20 percent, possibly more under certain conditions, of the outstanding shares. Some of NewPage’s stockholders owning a majority of the outstanding shares of NewPage common stock have agreed to vote in favor of the approval of the transaction, according to the release.

Verso will finance the acquisition through $750 million in committed financing, which will be used to pay the cash portion of the merger consideration and to refinance NewPage’s existing $500 million term loan prior to closing. The value of the transaction is $1.4 billion, composed of the cash consideration, the $650 million of new Verso first lien notes, the Verso common stock and the refinancing of NewPage’s $500 million term loan, the release states.

In addition, Verso intends to conduct exchange offers and consent solicitations for its outstanding fixed-rate second lien notes and subordinated notes. The closing of the acquisition is conditioned upon the consummation of the exchange offers. The transaction also is subject to regulatory approvals and other closing conditions.

Paterson will lead the combined organization.

Verso has agreed to appoint to its board of directors a current director of NewPage. Prior to closing, the current leadership teams of Verso and NewPage will continue to lead their respective organizations to ensure that both companies provide quality products and services to their customers and to ensure completion of the proposed transaction, according to Monday’s statement.

A team from Verso and New Page will be chosen to lead integration efforts after the closing, it said.

dperry@sunjournal.com

The Rumford mill

1901: Oxford Paper Co. established by Hugh J. Chisholm Sr.

1967: Ethyl Corp., a Virginia-based gas, chemical and oil company, purchased Oxford Paper Co.

1976: Idaho-based Boise Cascade purchased the mill.

1996: Ohio-based Mead Paper purchased the mill for about $650 million.

2002: West Virginia’s Westvaco merged with Mead Corp., forming MeadWestvaco and maintaining ownership of the mill.

2005: NewPage Corp., headquartered in Ohio, purchased the mill and invested more than $105 million in equipment, process modifications and manufacturing technology.

2014: Verso Paper Corp. announces plans to buy NewPage Holdings Inc. for $1.4 billion, including the Rumford mill, which is the largest employer in Western Maine.