2014

International Paper Signs Letter of Intent to Explore xpedx -- Unisource Combination

MEMPHIS, Tenn., 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.

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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.

John Faraci, 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. 

Subject to applicable laws and regulations, the parties do not intend, and undertake no obligation, to provide updates or make further statements regarding these discussions or the potential transaction until the letter of intent is terminated, or until a definitive agreement is reached.  The process to complete a transaction could take up to 12 months.

International Paper (NYSE: IP) is a global leader in packaging and paper with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include industrial and consumer packaging and uncoated papers, complemented by xpedx, the company's North American distribution company. Headquartered in Memphis, Tenn., the company employs approximately 70,000 people and is strategically located in more than 24 countries serving customers worldwide. International Paper net sales for 2012 were $28 billion.  For more information about International Paper, its products and stewardship efforts, visit internationalpaper.com.

Certain statements in this press release may be considered forward-looking statements. These statements reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Factors which could cause actual results to differ include but are not limited to: (i) the ability of the parties to reach a definitive agreement on a mutually acceptable transaction; (ii) the receipt of governmental and other approvals and favorable rulings associated with such a transaction and the successful fulfillment or waiver of all other closing conditions for such a transaction without unexpected delays or conditions; (iii) the successful closing of such a transaction within the estimated timeframe; (iv) our ability to achieve the benefits we expect from such a transaction; (v) increases in interest rates; (vi) industry conditions, including but not limited to changes in the cost or availability of raw materials, energy and transportation costs, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products; (vii) global economic conditions and political changes, including but not limited to the impairment of financial institutions, changes in currency exchange rates, credit ratings issued by recognized credit rating organizations, the amount of our future pension funding obligation, changes in tax laws and pension and health care costs; and (viii) unanticipated expenditures related to the cost of compliance with existing and new environmental and other governmental regulations and to actual or potential litigation. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements are discussed in greater detail in our Securities and Exchange Commission filings.  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE International Paper



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