updated 3/17/2008 11:40:42 AM ET 2008-03-17T15:40:42

Weyerhaeuser Co., one of the world's largest lumber and packing producers, said Monday it is selling its containerboard packaging and recycling unit to International Paper Co. for $6 billion in cash.

The sale includes nine containerboard mills, 72 packaging locations, 10 specialty-packaging plants, four kraft bag and sack locations and 19 recycling plants. About 14,300 employees work at the containerboard packaging and recycling business.

Weyerhaeuser said it plans to use a good part of the sale's proceeds to pay down debt.

International Paper said it expects to complete the deal in the third quarter, and said it will add to earnings in 2009. The Weyerhaeuser unit is expected to function separately from International Paper until the deal is complete.

The company had been considering a sale of the division as it looked to focus on its timber, wood products and real estate operations.

"The acquisition expands our geographic presence in the U.S. and Mexico and diversifies our customer base in key product lines," Carol Roberts, senior vice president of International Paper's packaging division, said in a statement.

International Paper said it will finance the transaction through debt and financing commitments from several financial institutions. The paper and wood products company expects to see a $1.4 billion tax benefit from the deal, bringing the net purchase price to about $4.6 billion.

Weyerhaeuser shares rose $1.95, or 3.2 percent, to $63.92 in morning trading Monday, while International Paper shares fell $1.51, or 4.7 percent, to $30.75.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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