On Wednesday, Deltic Timber (NYSE: DEL ) announced an agreement to buy out the 50% interest in its Del-Tin Fiber joint venture currently held by International Paper (NYSE: IP ) subsidiary TIN, The effect of this purchase will be to give Deltic 100% ownership of Del-Tin.
Del-Tin manufacturers medium density fiberboard at a plant in El Dorado, Ark. Specific details on the subsidiary's revenues and profitability were not disclosed, but Deltic did let on that it thinks the purchase will be "accretive to Deltic's financial performance."
Deltic will pay $5.2 million in cash, and assume all of TIN's $14.8 million in debt guarantees on local government bonds that were issued in 1998 to finance construction of the Del-Tin Fiber plant. These bonds mature on December 1, 2027.
Investors reacted positively to the announcement, and Deltic shares are up 1.3% in Thursday trading, at $72.17.