KPS Capital Partners has signed a non-binding letter of intent to acquire Wausau Paper's (NYSE: WPP) specialty paper business for an initial cash purchase price of $130 million. Wisconsin-based Wausau makes and markets paper products for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products. Its technical specialty papers include premium release liners, highly engineered papers for industrial applications, tape-base papers, specialty-food packaging and finishing products and high-performance coated liner products. Following the purchase, KPS will combine Wausau with an undisclosed company the private equity firm intends to acquire. Wausau has the option to take an initial minority ownership position in the new company.