April 22, 2013
/PRNewswire/ -- International Paper (NYSE: IP) announced today it is in talks with Unisource regarding a proposed business combination of xpedx, International Paper's distribution business, and Unisource. Both xpedx and Unisource are business-to-business distributors of printing, packaging and facility supplies. The discussions were initiated when Unisource approached International Paper about a possible merger, and on
April 19, 2013
, the parties entered into a non-binding letter of intent to explore a possible transaction.
The letter of intent outlines a "Reverse Morris Trust" transaction in which International Paper would contribute the assets of xpedx to a newly-formed corporation, and receive a cash dividend financed with debt in the new corporation's capital structure. This new corporation 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.
The amounts of the relative ownership in the merged company by International Paper and Unisource shareholders, and the amount of the dividend payment to International Paper, are the subject of further negotiations between the parties. Following the spin-off and merger, 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.
, Chairman and CEO of International Paper said he sees considerable potential in the merger. "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 parties have agreed to negotiate exclusively with each other for a period of time until a definitive agreement can be reached or the parties terminate the letter of intent. No assurances can be made that the parties will reach agreement on a mutually acceptable transaction or that the transaction, if completed, will be on the terms outlined in the letter of intent. If no agreement on the transaction can be reached, xpedx will continue to operate as a division of International Paper. International Paper does not intend to seek alternative transactions for xpedx.