Leading global paper and forest products company
International Paper Company
) completed the spinoff of its distribution solutions business,
xpedx, and its subsequent merger with UWW Holdings, Inc., the
parent company of Unisource Worldwide.
The combined unit now operates as Veritiv Corporation, which will
begin regular trading today on New York Stock Exchange under the
International Paper divested its underperforming distribution
business, xpedx and merged it with UWW Holdings. The merger led to
the formation of Veritiv, which will own and operate the combined
distribution solutions businesses of xpedx and Unisource. Unisource
is a distributor of printing paper and packaging equipment and also
provides facility solutions and logistics.
Per the terms of the deal, Veritiv issued 16 million shares, with
International Paper retaining 51% stake in the new company. UWW
Holdings received 7.84 million unregistered shares of Veritiv
common stock, which equates to roughly 49% stake in Veritiv.
Accordingly, shareholders of International Paper received 8.16
million shares of Veritiv on a pro-rata basis. (See:
International Paper Sets Distribution Ratio for
The previously announced definitive distribution ratio of the
shares increased to some extent, owing to certain repurchases by
International Paper of its common stock after the record date. The
company's shareholders received 0.019118445 shares of Veritiv
common stock for each share of International Paper common stock.
The receipt of Veritiv stock will be tax-free to International
Paper's shareholders for U.S. federal income-tax purposes,
excluding the cash received in lieu of fractional shares of Veritiv
In addition, International Paper received a special payment of $400
million, subject to certain adjustments. The consideration was
financed with new debt in Veritiv's capital structure.
Memphis-based International Paper is the world's leading producer
of containerboards used to make corrugated brown boxes for shipping
most goods. Its performance in first-quarter 2014 was strained due
to adverse weather conditions, which translated into lost revenues
and high costs. But the company is expected to get back on the
track once the U.S. economy recovers.
Over the past eight years, the company has gradually been
discarding its non-core assets, transforming itself into an
industrial packaging leader. The xpedx spin-off was part of its
restructuring strategy to increase focus on its legacy business.
The formation of Veritiv is expected to create significant value
for the company and generate approximately $150 - $225 million in
annual net synergies. The new entity, as a provider of end-to-end
print, packaging, facility and logistics solutions, has projected
2014 revenues in the range of $9 - $10 billion.
International Paper, as the major stakeholder in Veritiv, is
expected to benefit from the company's extensive geographic
footprint, wide-ranging product portfolio and differentiated
International Paper currently holds a Zacks Rank #4 (Sell). Some
better-ranked stocks in the basic materials sector include
Alderon Iron Ore Corp.
Hi-Crush Partners LP
Universal Stainless & Alloy Products Inc.
), all of which sport a Zacks Rank #1 (Strong Buy).
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