MeadWestvaco (MWV) says it plans a tax-free spin-off of its specialty chemicals business, a maker of pine chemical derivatives for printing inks, adhesives, and asphalt paving, among other sectors. The chemicals business also makes activated carbon products. The spin-off is expected to be complete by the end of this year, and MWV “remains open to other value-creating alternatives” for specialty chemicals.
MWV’s specialty chemical business posted revenue of $1.03 billion and Ebitda margin of 26.5% for the 12-month period ended 30 September. Pine chemical derivatives accounted for 76% of sales and activated carbon was 24%. The specialty chemical business will remain headquartered in Charleston, SC. Edward Rose is currently president of the division.
MWV company will undertake a reorganization of its remaining paper and plastic packaging business along with the spin-off of specialty chemicals. “The separation of our specialty chemicals business, along with the organizational redesign work we are undertaking, reflects the strong commitment of our management team and board of directors to creating value for our shareholders and establishing a business model that will significantly improve the profitability and cash flow profile of our packaging business,” says MWV chairman and CEO John Luke, Jr.
MWV expects to use cash generated from the spin-off to pay down debt. BofA Merrill Lynch and Goldman Sachs are acting as MWV’s financial advisers on the deal, and Wachtell, Lipton, Rosen & Katz are its legal adviser.
By Vincent Valk