JAY – The private equity firm that’s buying two International Paper mills in Maine said Tuesday it doesn’t have current plans to reduce staff.
A spokesman said the firm typically invests in a company for up to eight years before looking for a return or making major financial changes.
IP announced a deal struck with Apollo Management early this week, $1.4 billion in exchange for four coated paper mills in Maine, Michigan and Minnesota.
CMP Holdings LLC has been set up to legally own the IP assets; Apollo is its parent, according to spokesman Steven Anreder in New York.
The deal is expected to close mid-summer. IP employs 1,800 people in Maine, 1,000 of them in this town’s Androscoggin Mill. When word broke Monday, economists and paper industry officials professed to knowing little to nothing about the new owners.
Apollo Management doesn’t have a president. Anreder said it is a group of partners whose names are not public.
The company, in different incarnations, owns parts of United Rentals, Vail Resorts, Sirius Satellite Radio, Rent-A-Center and the plastics division of Tyco, among others.
Apollo has managed a total of $13 billion in investments since 1990.
Its typical strategy: “They invest in companies, help them grow, then at some point in time, six or eight years, they look to get some realization on their investment,” Anreder said.
That “realization” could mean going public (selling stock), bringing in more partners or something else, he added. “There’s a lot that could happen.”
A new partnership is formed for the new ventures, but many of the same people invest each time, Anreder said.
He rebuffed a paper analyst’s description of the company as “vulture capitalists” who would trim personnel or starve investment to cut costs before selling off the company.
Apollo makes companies “efficient. Everybody applauds that,” Anreder said. “The idea of an investment is to grow the company, to increase market share.”
Apollo hires out the operations of its companies. It hasn’t announced who will manage the Maine mills, the spokesman said. All four paper mills will be known under a yet-to-be-determined name.
Economic and Community Development Commissioner Jack Cashman said company officials plan to visit the governor’s office in late summer and introduce themselves, “but I don’t expect they’ll be asking the state for anything.”
Their strategy sounds like “a good thing,” he added. “They’re going to be looking to make their business bigger and they’re going to have to invest because that’s the only way to do it.”
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