updated 4/4/2006 4:30:47 PM ET 2006-04-04T20:30:47

International Paper Co., the world’s largest forest products company, announced an agreement Tuesday to sell about 5.1 million acres of forest land for $6.1 billion to two investor groups.

The sale is part of the Stamford-based paper company’s plan to focus on uncoated papers and industrial and consumer packaging.

IP said it will sell approximately 3.8 million acres of forestlands located across the southern U.S. and 440,000 acres in Michigan to an investor group led by Resource Management Service LLC (RMS) for approximately $5 billion in cash and notes.

Under a separate agreement, IP will sell about 900,000 acres of forestland in Louisiana, Texas and Arkansas to an investor group led by TimberStar for approximately $1.1 billion in cash and notes at closing.

Upon closing these sales and the sales to conservation groups that were announced last week, IP will have sold 5.4 million acres, or approximately 85 percent of its U.S. forestland holdings, for $6.5 billion.

The company believes these combined transactions represent the largest private forestland sale in U.S. history.

“These agreements for the sale of forestlands at very attractive valuations are important steps forward in our plan to increase our focus and improve returns to shareowners,” said John Faraci, International Paper chairman and chief executive officer.

IP expects to receive a portion of the proceeds in the third quarter, with the bulk of proceeds arriving in the fourth quarter.

IP is also exploring the sale of approximately 300,000 acres, principally in New York. IP’s remaining acreage, approximately 830,000 acres primarily in the South, will be retained by the company and some may be later sold to maximize the value of the land.

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