January 28, 2014 By PrintAction Staff
International Paper today announced its distribution businesses xpedx and Unisource Worldwide Inc. will merge, under the terms of a definitive agreement, that is to result in the creation of a new publicly traded company.
The agreements were signed by International Paper, parent company of xpedx, and by UWW Holdings LLC, the holding company that owns Unisource and is owned by an affiliate of Bain Capital and by Georgia-Pacific, as well as certain of their affiliates.
Following the merger, approximately 51 percent of the shares of the new public company will be owned by International Paper shareholders, with the remaining approximately 49 percent of shares held by UWW Holdings.
If and when the merger is completed, expected by mid-2014 subject to certain closing conditions, the new company will have projected annual revenue in the range of US$9 billion to US$10 billion, and will have around 9,500 employees across more than 170 distribution centres in North America.
“This transaction provides excellent value for International Paper shareholders and is a unique opportunity for xpedx and Unisource to create a new company that is stronger, more competitive and able to provide even greater value to customers,” stated John Faraci, Chairman and CEO of International Paper. “We anticipate the new company will generate synergies of about $200 million.”
The xpedx and Unisource merger is to be done through what is called a Reverse Morris Trust structure, which means International Paper will indirectly contribute the assets of xpedx to a newly formed wholly owned subsidiary, xpedx Holding Company. In exchange, International Paper will receive stock of the subsidiary, as well as a cash payment of approximately US$400 million that is expected to be financed with new debt in the new company’s capital structure, as well as the potential for an additional cash payment pursuant to an earn-out provision.
International Paper will distribute shares of the new company to International Paper shareholders on a pro rata basis. Following the spinoff of the new company to International Paper shareholders, Unisource will immediately merge with and into the new company.
The new company’s executive offices will be located in the greater Atlanta area, while retaining two existing operational headquarters of the legacy companies in Loveland, Ohio, and Norcross, Georgia.
Mary Laschinger is to be CEO of the new company and Chairman of its board of directors. Allan Dragone, currently president and CEO, Unisource Worldwide, will serve as a director of the new company and will advise on integration activities.
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