By GEORGE ROGERS
of The Gazette
WISCONSIN RAPIDS – Control of a Central Wisconsin economic bulwark has passed to a new owner, leaving uncertainty in its wake.
On Wednesday, as expected, shareholders of Consolidated Papers Inc. approved the company's purchase by Stora Enso Oyj, a Finnish-based company. It required a two-thirds vote, and had it not been approved Consolidated would have owed Stora Enso $120 million in termination costs plus up to $1 million in expenses.
About 77 percent of the shares were voted for the sale and only one percent against, it was announced at the meeting. The remaining shares were not voted and were counted as "no" votes, or had not yet been tabulated. Stora Enso stockholders had already approved the purchase.
The Consolidated name will now gradually disappear, to be replaced by Stora Enso.
The estimate was that Wednesday's meeting would last a half-hour. It went 34 minutes.
One question is whether Stora Enso will make deep cuts in employment.
Another question is, will Stora Enso be as civic-minded as Consolidated was?
Finally, what is the future of the 700,000 acres of land owned and managed by Consolidated in the United States and Canada? Even Stevens Point's Green Circle is potentially affected because the trail runs through Consolidated land north of River Pines.
Kai Korhonen, who will be Stora Enso's North American president, said no decision has been made on the future of the land. But George Mead, Consolidated's board chairman, said the trend in the American paper industry is against holding land.
The word is that major consumer purchases and bank loans have been affected in Wisconsin Rapids because of apprehension among Consolidated employees. A Consolidated spokesman acknowledged that the purchase of big ticket items such as homes and cars has been slow in Rapids, but he attributed it to previously announced plans to cut the workforce, rather than to the sale.
A Stevens Point banker said he could detect no effect on local business, despite the fact that Consolidated has two paper mills here.
Consolidated's presence in Stevens Point is not as great as in Wisconsin Rapids, but the company has been a major player here for generations. In 1918, it bought the Jackson Milling Co. and built its Stevens Point Division, where it manufactures specialty papers. In 1946 it acquired the Wisconsin River Pulp & Paper Co. in Whiting and converted it from a newsprint mill, the last in the state, to coated papers. Company-wide, coated papers have been Consolidated's principal product over the years.
As of Dec. 31, 1999, 513 people were employed at the Wisconsin River Division and 400 at the Stevens Point Division. A company spokesman said there have been reductions since then, but not large ones.
Consolidated has been a purchaser of pulpwood from local loggers. Despite its vast forestland holdings, it gets most of its pulp from private land; county, state and national forests; sawmill waste and recycled paper.
The company had its beginning in 1894 when it was founded as Consolidated Water Power Co. It subsequently became Consolidated Water Power & Paper Co. and then, in 1962, Consolidated Papers Inc. It recently spun off its stake in power generating to eliminate a legal complication in the way of the Stora Enso purchase.
From Consolidated's early days the Mead family was associated with the company, and at the end members of the family owned 35 percent of the stock, held in a voting trust.
The Mead name is stamped on the landscape of Central Wisconsin. Wednesday's stockholder vote took place at Hotel Mead. The Mead Wildlife Area, which sprawls across parts of Portage, Marathon and Wood counties, is named for George W. Mead, a former Consolidated chief executive and grandfather of the last board chairman. The core of the wildlife area is 20,000 acres donated to the state in 1959 by Consolidated. Mead Park on Stevens Point's west side was a gift to the city in 1946 from George W. Mead.
Stora Enso says the Stora part of the company goes back 1,000 years ago to a copper mine in Sweden. The firm got into forest products in the late 19th century. Enso was founded in Finland in the 1870s as a forest products company. Today's Stora Enso is the result of a 1998 merger.
The Consolidated acquisition makes Stora Enso the world's second largest paper manufacturer.
The purchase was, when initially announced, estimated at $4.4 billion or $44 a share in cash, Stora Enso stock or a mixture of both. Because of a decline in the Euro and a slump in Stora Enso stock, the value of the takeover is now under $39 a share.
Stockholders could choose whether they wanted cash, stock or both, but George Mead said no one will receive it all in cash. The cash part of the transaction is expected to be mailed out Sept. 11.
Mead, in his remarks to shareholders, called Stora Enso "a company that can lead us into a new, challenging world in the forest products industry." He said it is a company that can grow and survive, and he said Consolidated brings to Stora Enso an envied position in the American paper industry.
Korhonen, who will have offices in Chicago and Wisconsin Rapids, said Stora Enso's goal is to be "the leading forest products company in the world." Its growth will come, he said, through mergers and acquisitions. Although primarily a European company, it has operations around the globe. It focuses on the production of publication papers, fine papers and packaging board.
Worldwide, Stora Enso has about 45,000 employees.
Earlier, Stora Enso said it anticipates its American Depository Shares will begin trading on the New York Stock Exchange (NYSE) on Sept. 12, under the symbol SEO.
Also, Consolidated signed an agreement to sell its one-third interest in Wisconsin River Power Co. to Wisconsin Public Service Corp. The move could free Stora Enso from the need to secure prior Securities and Exchange Commission approval for its acquisition of Consolidated.