International Paper announced a plan to pursue a spin-off of the company's Printing Papers segment into a standalone, publicly-traded company (SpinCo). The transaction will result in two streamlined, leading companies well-positioned for long-term success.
Upon completion of the transaction, International Paper and SpinCo will each be well-positioned to create long-term value. The company plans to complete the spin-off late in the third quarter of 2021.
“We remain committed to producing sustainable products that people depend on every day and accelerating value creation for International Paper and our shareowners. This transaction represents a logical next step as we continue to build a better IP,” said Mark Sutton, chairman and CEO. “International Paper will be a more-focused corrugated packaging and absorbent cellulose fibers company serving attractive segments, well-positioned to increase earnings and cash generation.”
International Paper intends to accelerate profitable growth in Industrial Packaging in North America and Europe, the Middle East and Africa and improve the returns of its Global Cellulose Fibers business. International Paper will continue its joint venture with Ilim Holdings in Russia.
International Paper will be a streamlined, more-agile organization and expects to generate an additional $350 million to $400 million of annual earnings by the end of 2023.
Following the completion of the transaction, International Paper expects to have approximately:
- $17 billion in sales, 85% in Industrial Packaging and 15% in Global Cellulose Fibers;
- 20,000 customers;
- 20 containerboard mills with 14.5 million tons of annual capacity;
- Eight pulp mills with 3.2 million metric tons of annual capacity;
- 220 converting facilities
Upon completion of the spin-off, Jean-Michel Ribiéras, currently SVP, Industrial Packaging, will become the CEO of the new company. John V. Sims, currently SVP, corporate development, will serve as SpinCo's CFO.
As a standalone entity, in addition to a portfolio of leading brands, SpinCo will have approximately:
- $4 billion in sales;
- Eight mills with 2.9 million metric tons of annual capacity and 0.4 million metric tons of coated paperboard capacity
The transaction will be implemented through the distribution of SpinCo shares to International Paper shareowners. International Paper will retain up to 19.99% of the shares of SpinCo at the time of the separation, with the intent to monetize and provide additional proceeds to International Paper.
The proposed spin-off is subject to customary conditions, including final approval by the International Paper Board of Directors, receipt of a tax opinion and the filing and effectiveness of a Form 10 registration statement with the US Securities and Exchange Commission.
