International Paper Talking Xpedx Merger

By Bill Dries

Memphis-based International Paper Co. acknowledged Monday that it is in talks with Unisource about a possible merger of Unisource and IP’s xpedx printing distribution business.

Unisource, an Atlanta-based printing distribution business with 85 distribution centers across North America, approached International Paper and the two companies on April 19 signed a non-binding letter of intent to hold merger talks.

The two companies are discussing a transaction in which xpedx’s assets would become part of a new spin-off company to IP shareholders and then merged with Unisource.

The new company would be a publicly traded corporation independent of either company with the expectation that the leaders of the new company would be a combination of executives from xpedx and Unisource, according to the formal announcement Monday from International Paper.

International Paper and Unisource executives have not yet worked out the ownership percentages or how much the dividend payment would be to International Paper.

The letter of intent is no guarantee that the two companies will reach an agreement and the IP announcement said leaders in the Memphis headquarters do not intend to seek another prospective merger partner if the talks with Unisource do not produce an agreement.

The discussions are exclusive, meaning a competing offer from a third party would not be considered.

Xpedx has been a challenge to International Paper because commercial printing is the bulk of the division’s revenues. And more companies are able to do their own printing with the change in technology.

The division also bought 20 rival companies over a 19-year period that ended in 2008.

Last year, Mary Laschinger, senior vice president of xpedx, acknowledged that the company didn’t integrate all of those companies into a single cohesive system as well as it should have. The integration effort began anew in 2005 and by last year Laschinger and other executives, including IP CEO John Faraci, expressed confidence that xpedx was on the right track.

The review of xpedx has been part of a larger review and restructuring of International Paper over a seven- to eight-year period that included selling off its timberland holdings as well as last year’s merger with Temple-Inland of Austin, Texas, one of IP’s biggest rivals, and the recently announced expansion of International Paper’s East Memphis headquarters.