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VOL. 129 | NO. 19 | Wednesday, January 29, 2014

IP Merges Xpedx With Unisource

By Bill Dries

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Memphis-based International Paper Co. has reached an agreement to merge its xpedx distribution business with Unisource Worldwide Inc. of Atlanta.

The agreement, announced Tuesday, Jan. 28, will create a new publicly traded company based in Atlanta with 51 percent of the shares owned by International Paper shareholders.

International Paper executives confirmed in April that they were in talks with Unisource and that Unisource approached International Paper about the deal.

At the outset of the talks, the premise was that the merger would produce a new company led by a combination of executives from xpedx and Unisource.

The announcement of an agreement Tuesday fills in significant details including leadership.

Xpedx president Mary Laschinger becomes CEO of the new company and chairman of the board. Unisource Worldwide president and CEO Allan Dragone is an adviser on the integration and will be a director of the new company.

Both companies hope to complete the merger by June.

International Paper puts up the assets of xpedx to form what is, for now, known as xpedx Holding Co. IP gets stock of the holding company in exchange for the assets. International Paper also gets a cash payment of $400 million, which will be financed with new debt in the holding company’s capital structure. The shares of the holding company that go to IP shareholders are distributed on a pro-rate basis that is tax-free to IP and the shareholders.

Shares of Unisource will be converted in shares of the new company that will represent 49 percent of the share in the new company.

The new company has a commitment with three banks for $1.4 billion in financing backed by its assets. The financing is for the cash payment to IP and also refinances the existing debt of Unisource.

The xpedx division of International Paper has been a challenge to the paper giant because commercial printing is the bulk of the division’s revenues. More companies are able to do their own printing with advances in technology.

Another factor is International Paper agreeing to talk with Unisource is that xpedx bought 20 rival companies over a 19-year period ending in 2008.

Laschinger acknowledged in 2012 that the integration of all of those companies didn’t go as well as expected, so International Paper began working anew in 2005 on the cohesiveness.

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