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Project Genesis | Atlantic Corporation | ACE Consulting Group | “A service we provide with excellence“ | ------------------------------------------------- Executive Summary The purpose of this report is to assess the viability of the acquisition of Royal Paper Corporation’s (Royal) Monticello mill and box plants by Atlantic Corporation (Atlantic). This will be conducted through the evaluation and analysis of whether this project is profitable and also if this is a sound strategic move. In making our final decision, we have undertaken extensive qualitative and quantitative analysis. Such factors we have taken into consideration are the future trend of linerboard prices, the…show more content…
Moreover, this further supports our recommendation for Atlantic to proceed with this acquisition as it will obtain one of the best mills for a cheap initial cost ($319m compared to the construction cost of $750m). Will Atlantic-Royal’s combined linerboard and box mill operations be better or worse than the industry overall. Atlantic’s forest product industry is very much tied to the performance of the overall economy, in particularly to changes in interest rate fluctuations. In contrast, the fortunes of the linerboard industry is more protected from the adverse impact of interest rate instabilities and swings in economic activity, and better controlled to gain significant advantages from the upsurge in economic activity. Currently Atlantic’s existing Ohio linerboard mill produces 780 tons per day of linerboard, which represents a mere 1.8% of the nation’s linerboard capacity. This is far below the 150,000 tons of linerboard that Atlantic purchases every year from its competitors. Consequently, with such a tight market, linerboard could either become unavailable or available at very expensive prices. If Atlantic pursues their acquisition strategy in purchasing the linerboard mills from Royal, this could help greatly in strengthening Atlantic’s linerboard capacity and ensure to retain their box plants profits. With Royal’s current Monticello mill producing kraft paper and linerboard, this would require $140.8 million to convert all of the mill’s kraft capacity to
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