On January 8, 2015, MeadWestvaco announced that its board had approved plans to spin off its specialty chemicals business into a separate, publicly traded company.
MWVs specialty chemicals division manufactures chemicals derived from pine and wood-based activated carbon. These chemicals are used in printing inks, asphalt paving, adhesives, lubricants, emission control systems for vehicles, food and water production, and other industrial processes. The Pine Division has supplied the lubricant industry with tall oil fatty acid (TOFA) and distilled tall oil (DTO) for over 70 years.
The separation of specialty chemicals will establish two strong companies that are better positioned to compete and profitably grow in their targeted markets, Chairman and CEO John A. Luke Jr. said in a statement on Thursday.
The spin off includes a manufacturing plant in DeRidder, in southwest Louisiana. The plant spans about 250 acres and employs nearly 200 people.
MeadWestvaco said it is open to other value-creating options for its specialty chemicals business during the separation process. The Richmond, Virginia-based company also said it anticipates receiving cash from the spinoff that will mostly be used to pay down debt to maintain its investment-grade credit rating.
The spin-off is expected to close by the end of 2015, subject to customary closing conditions and a legal opinion on the tax-free nature of the transaction. Once completed, MWV Specialty Chemicals will be an independently traded public company.
On January 26, 2015, Rock-Tenn Company and MeadWestvaco Corporation announced that they entered into a definitive combination agreement to create a leading global provider of consumer and corrugated packaging in a transaction with a combined equity value of $16 billion. The combined company, to be named prior to closing, will have combined net sales of $15.7 billion and adjusted EBITDA of $2.9 billion, including the impact of $300 million in estimated annual synergies to be achieved over three years.
