xpedx, Unisource Worldwide to Merge

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Distribution solutions businesses Unisource Worldwide Inc., Norcross, Ga., USA, and xpedx, Loveland, Ohio, will merge under an agreement that creates a new publicly traded company. The agreement to merge the two businesses was signed by International Paper, Memphis, Tenn., parent company of xpedx, and by UWW Holdings Inc., Norcross, the holding company of Unisource and owned indirectly by an affiliate of Bain Capital and by Georgia-Pacific, Atlanta, Ga., as well as certain of their affiliates.

Upon the expected completion of the merger this summer, the new company will have projected annual revenues in the range of $9 billion to $10 billion and will have about 9,500 team members across more than 170 distribution centers in North America. The new company is expected to generate approximately $200 million in synergies.

The transaction will be accomplished through a Reverse Morris Trust structure. International Paper will contribute the assets of xpedx to a newly formed wholly owned subsidiary, xpedx Holding Co., in exchange for the stock of the subsidiary, a cash payment of approximately $400 million expected to be financed with new debt in the new company's capital structure, as well as the potential for an additional cash payment pursuant to an "earn-out" in the sixth year after closing. The subsidiary will be spun off into a new company.

In connection with the merger, the shares of UWW Holdings will be converted into a number of shares of the new company such that, following the merger, approximately 51% of shares of the new public company will be owned by IP shareholders, with the remaining approximately 49% of shares held by a new holding company, UWW Holdings LLC. The new company intends to apply to list its shares for trading on the New York Stock Exchange.

The new company's executive offices will be located in the greater Atlanta area. In addition, the new company will retain the two existing operational headquarters of the legacy companies in Norcross, Ga., and Loveland, Ohio.

Mary Laschinger, currently president, xpedx, and SVP, International Paper, will be CEO of the new company and chairman of its board of directors. Allan Dragone, CEO of Unisource, will serve as a director of the new company and will advise on integration activities.

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