International Paper is talking with Unisource about a proposed business combination of Xpedx, IP’s distribution business, and Unisource. Both Xpedx and Unisource are business-to-business distributors of printing, packaging and facility supplies. Unisource approached International Paper about a possible merger in April.
International Paper (IP) is a global leader in packaging and paper with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include industrial and consumer packaging and uncoated papers, complemented by xpedx, the company’s North American distribution company. Headquartered in Memphis, TN, the company employs approximately 70,000 people and is strategically located in more than 24 countries serving customers worldwide.
Unisource is one of the industry’s largest global marketers of printing materials, facility supplies and equipment, and packaging materials and equipment. Headquartered in Norcross, GA, the company is located in nine countries, and has more than 40 years of experience. Unisource has vital alliances with top national brands and offers the most comprehensive suite of customer solutions in the industry.
In the spin-off and merger, International Paper would contribute the assets of xpedx to a newly-formed corporation, which would be spun off to International Paper shareholders and immediately thereafter merged with Unisource in a transaction intended to be tax-free to International Paper and its shareholders.
According to one estimate, the two merchants account for about $10 billion in combined revenue. Market-Intell estimates that of this, about $7 billion is paper, with the balance being graphic arts supplies, packaging and facility supplies. This gives the two companies a combined share of about 30 percent of the U.S. paper merchant business.
The new company would be an independent publicly traded corporation with a majority of independent directors. Some combination of current Xpedx and Unisource management is expected to lead the new company.
According to Jack Miller, Printing Impressions, “A merger like this would create efficiencies in logistics and service, and allow cost reduction and synergies. This would give the new company the capability to provide better service, reduce prices, or increase profit margins.”
John Faraci, chairman and CEO of International Paper said, “This is a unique opportunity for xpedx and Unisource to create a new company that is stronger, more competitive and provide even greater value to customers. Both companies are well-run, with a lot of talented employees and a good customer base.”
The process to complete a transaction could take up to 12 months, and no assurances can be made that the parties will, in fact, reach agreement on a mutually acceptable transaction.
Stay tuned. We’ll check back and see what emerges!