International Paper said on Thursday it would split into two publicly traded companies by spinning off its European packaging business, aiming to streamline its operations and boost productivity across North America.
The move is expected to aid the paper and packaging producer’s earnings and strengthen its cash flow at a time when demand for box shipments in key regions such as North America and Europe has slowed, owing to cautious consumer spending, weak housing market and uncertainties stemming from tariffs and other trade policies. International Paper, accounting for roughly one-third of the North American corrugated packaging market, completed a $7.2 billion buyout of London-based rival DS Smith last year and has since shed assets in Europe tied to the deal.
The split would leave International Paper with its North America business, which includes the company’s existing operations and the assets acquired from DS Smith. The new Europe, Middle East and Africa packaging company will consist of the combined operations that originated from both DS Smith and International Paper in the region, and is expected to list on the London Stock Exchange and the New York Stock Exchange.
International Paper said it plans to retain a meaningful ownership stake in the new company, which is expected to be spun off within 12 to 15 months. Andy Silvernail will remain chairman and CEO of the North America-focused International Paper, while DS Smith President Tim Nicholls will lead the new publicly traded company. International Paper also posted an adjusted loss of 8 cents per share during the fourth quarter ended December 31, compared with a 38-cent profit a year earlier, hurt by impairment charges related to its business restructuring. Shares of the company, which has a market capitalization of $21.91 billion, were largely unchanged in early trading.
