MEMPHIS, Tenn. -- International Paper announced on Monday, 1 July, the completion of the previously announced spinoff of its distribution solutions business, xpedx, and xpedx's merger with Unisource, with the combined companies now operating as Veritiv Corporation ("Veritiv").
The spinoff was accomplished by the contribution of the xpedx business to Veritiv and the distribution of 8,160,000 shares of Veritiv common stock on a pro-rata basis to International Paper shareholders. In exchange for such contribution, International Paper today received a special payment of $400 million, subject to certain adjustments, financed with new debt in Veritiv's capital structure. Immediately following the distribution, UWW Holdings, Inc., the parent company of Unisource Worldwide, Inc., merged with and into Veritiv, with the parent company of UWW Holdings, Inc. receiving 7,840,000 unregistered shares of Veritiv common stock (equal to approximately 49% of the total resulting outstanding shares of Veritiv common stock) as merger consideration. Veritiv is expected to begin "regular way" trading on the New York Stock Exchange tomorrow under the symbol VRTV, CUSIP number 923454 102.
"The completion of this transaction and creation of Veritiv provide excellent value for International Paper shareholders, as this new independent public company emerges with opportunities to be stronger and more competitive than either of the merged companies alone," said International Paper Chairman and CEO John Faraci.
The definitive distribution ratio increased slightly due to certain repurchases by IP of its common stock after the record date. Shares of International Paper common stock outstanding as of 5:00 p.m. (EDT) on the June 20, 2014 record date for the distribution (other than shares repurchased by IP) received 0.019118445 shares of Veritiv common stock for each share of International Paper common stock. International Paper shareholders did not receive fractional shares of Veritiv common stock. Instead, fractional shares of Veritiv common stock will be aggregated and sold in the open market, with the net proceeds to be distributed pro rata in cash payments to the International Paper shareholders who would otherwise receive a fractional share of Veritiv common stock.
The receipt of Veritiv common stock in the distribution is tax-free to International Paper shareholders for U.S. federal income tax purposes, except for the gain or loss attributable to cash received in lieu of fractional shares of Veritiv common stock. International Paper shareholders are urged to consult with their tax advisers with respect to the U.S. state and local or foreign tax consequences, as applicable, of the spin-off.