International Paper Company (IP) announced the timing with regard to the upcoming merger of its distribution solutions business, xpedx, with UWW Holdings, Inc. The new publicly-traded company, Veritiv Corporation, to be formed as a result of the merger will begin trading on a 'when-issued' basis on New York Stock Exchange (:NYSE) under symbol 'VRTV WI' on June 18.
Thereafter, on Jul 2, 2014, the company will commence regular trading under the ticker 'VRTV.'
The board of directors of International Paper has declared that its shareholders as of Jun 20, 2014, will be entitled to receive 8.16 million shares of Veritiv's common stock, under a pro rata distribution system. The distribution ratio is estimated to be around 0.0188 shares of Veritiv common stock for each share of International Paper, calculated on the basis of the latter's common stock currently outstanding. The distribution is subject to certain conditions.
Any fractional shares of Veritiv common stock will be aggregated and sold in the open market, with the resultant proceeds being distributed in cash to relevant shareholders on a pro rata basis.
International Paper had announced the spin-off of its struggling xpedx distribution business in a tax-efficient transaction under a Reverse Morris Trust structure in January. Per the deal, xpedx will merge with UWW Holdings, the parent company of Unisource Worldwide, to form a new entity, Veritiv Corporation. International Paper will receive $400 million in cash and own 51% stake of the new company, and UWW Holdings will own the remaining stake.
Following the completion of the merger, Veritiv will own and operate the combined distribution solutions businesses of xpedx and Unisource. It will provide end-to-end print, packaging facility and logistic solutions to customers, by leveraging its extensive geographic reach, rich product portfolio and differentiated service platform.
North America-based Veritiv's annual revenues are projected to be in the range of $9 to $10 billion. The merger is expected to generate about $150 million to $225 million in annual net synergies.
International Paper has undergone restructuring over the past eight years in order to discard its non-core operations and focus on the traditional industrial packaging businesses. The spin-off of xpedx was part of its strategy to increase focus on its legacy business, while attempting to create value with an underperforming business by forming a stronger and more competitive company.
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