International Paper announces a plan to pursue a spin-off of the Company's Printing Papers segment into a standalone, publicly traded company ("SpinCo"). Upon completion of the transaction, International Paper and SpinCo will each be well positioned to create long-term value. The Company expects the separation to be tax-free for the Company's shareowners for U.S. federal income tax purposes and plans to complete the spin-off late in the 3Q 2021.
International Paper intends to accelerate profitable growth in Industrial Packaging in North America and Europe, the Middle East and Africa and improve the returns of its Global Cellulose Fibers business. International Paper will continue its joint venture with Ilim Holdings in Russia.
The company intends to reduce its cost structure and accelerate earnings. International Paper will be a streamlined, more-agile organization and expects to generate an additional $350 - $400 million of annual earnings by the end of 2023, including $50 - $100 million in annual incremental earnings growth and $300 million in structural cost reductions. International Paper remains committed to its current capital allocation framework, which is the foundation for driving shareowner value.
SpinCo intends to raise debt in order to pay a dividend to International Paper, which will be used to pay down outstanding debt.
Upon completion of the spin-off, Jean-Michel Ribiéras, currently senior vice president, Industrial Packaging, will become the CEO of the new company, which will be referred as SpinCo until the company establishes its own corporate identity. John V. Sims, currently senior vice president, Corporate Development, will serve as SpinCo's CFO. The remainder of the SpinCo leadership team and board of directors will be announced over the next several months.
SpinCo is expected to have talented teams, substantial scale, strong brands and low-cost assets to serve key geographies, including North America, Brazil and Europe. SpinCo's anticipated capital structure is intended to allow strategic and operating flexibility and the potential to optimize the business.
International Paper is a leading global producer of renewable fiber-based packaging, pulp and paper products with manufacturing operations in North America, Latin America, Europe, North Africa and Russia.
