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International Paper (NYSE: IP), Memphis, TN, has agreed to explore a proposed business combination of xpedx, International Paper's distribution business, and Unisource Worldwide Inc., Norcross, GA. 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, the parties agreed to explore a possible transaction.
The letter of intent outlines a 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 then merged with Unisource.
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.