Acquisitions

6 Months Ended

Jun. 30, 2011

Acquisitions

Acquisitions

NOTE 6 – ACQUISITIONS

On March 29, 2011, International Paper entered into an agreement with certain key majority shareholders of Andhra Pradesh Paper Mills Limited (APPM) to purchase approximately 53.5% of the outstanding shares of APPM for approximately $257 million in cash. In addition, International Paper has agreed to make a $62 million non-compete payment to the majority shareholders. Pursuant to Indian securities law, International Paper also plans to launch a mandatory public tender offer to acquire up to an additional 21.5% of the outstanding shares of APPM for approximately $104 million in cash. International Paper anticipates acquiring up to 75% of APPM's outstanding shares through these two transactions. APPM is one of the leading integrated paper manufacturers in India, with two mills that have a combined capacity of about 250,000 tonnes of uncoated freesheet papers annually. This transaction is expected to close upon approval by all regulatory jurisdictions.

In accordance with Securities and Exchange Board of India (SEBI) regulations, International Paper placed approximately $105 million into an escrow account in connection with the planned tender offer. In the unlikely event that International Paper fails to fulfill its obligations under the applicable SEBI regulations, SEBI may direct the amount of cash remaining in escrow to be distributed in equal proportion to APPM shareholders who have successfully tendered their shares, the SEBI Investor Protection and Education Fund, and APPM. On August 3, 2011, International Paper received a letter from SEBI directing that the tender offer price be increased to pay to all APPM public shareholders the same non-compete payment that we have agreed to pay to the majority shareholders. SEBI's direction about the non-compete payment is not consistent with our understanding of prevailing securities law in India and we intend to appeal it before proceeding with the tender offer.

On June 30, 2010, International Paper completed the acquisition of SCA Packaging Asia (SCA) for a purchase price of $202 million, including $168 million in cash plus assumed debt of $34 million. The SCA packaging business in Asia consists of 13 corrugated box plants and two specialty packaging facilities, which are primarily in China, along with locations in Singapore, Malaysia and Indonesia.

The following table summarizes the final allocation of the purchase price to the fair value of assets and liabilities acquired.

In millions
Cash and temporary investments	$	19
Accounts and notes receivable, net		70
Inventory		24
Other current assets		2
Plants, properties and equipment, net		103
Goodwill		30
Other intangible assets		38
Total assets acquired		286
Accounts payable and accrued liabilities		66
Deferred tax liability		7
Non-controlling interest		8
Other liabilities		3
Total liabilities assumed		84
Net assets acquired	$	202

The identifiable intangible assets acquired in connection with the SCA acquisition included the following:

In millions	Estimated Fair  Value		Average Remaining Useful Life
			(at acquisition date)
Asset Class:
Land-use rights	$	29		39 years
Customer relationships		9		16 years
Total	$	38