MWV to establish specialty chemicals biz as separate company

MeadWestvaco Corporation (MWV), the US-based packaging and packaging solutions provider, has decided to fully separate its specialty chemicals business from the rest of the company. The separation is expected to be executed by means of a tax-free spinoff of the specialty chemicals business to MWV shareholders, resulting in two independent, publicly traded companies. The spinoff is expected to be completed by the end of 2015. MWV remains open to other value-creating alternatives for the specialty chemicals business throughout this process.
 
John A Luke Jr., chairman and chief executive officer, MeadWestvaco, said, “The separation of specialty chemicals will establish two strong companies that are better positioned to compete and profitably grow in their targeted markets. This action continues our strong record of returning value to our shareholders, which has exceeded $4 billion over the last 10 years.”
 
Luke continued, “This is an opportunity we have created by executing on a deliberate strategy of building MWV's businesses into packaging and specialty chemicals leaders globally. The separation of our specialty chemicals business, along with the organisational 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.”
 
MWV expects to receive cash from the spinoff that will be used primarily to pay down debt to maintain MWV’s investment grade credit rating. MeadWestvaco expects to continue to pay a strong dividend, with the final rate to be determined post-separation. The company also will continue to look for opportunities to return capital to shareholders.
 
Following the separation, MWV will be in a position to accelerate its strategy as a global leader in packaging and packaging solutions, optimally positioned to create long-term value through its market-focused strategy. Through this strategy, the company has improved its growth and profitability profile by enhancing its product mix and focusing on the most attractive opportunities in growing global packaging markets while reducing structural costs.
 
The specialty chemicals business will look to strengthen its position by accelerating profitable growth in its megatrend aligned markets of energy, infrastructure and transportation. The business is a leading provider of performance chemicals used in printing inks, asphalt paving and adhesives, as well as in the agricultural, paper and petroleum industries. The business also produces activated carbon products used in gas vapour emission control systems for automobiles and trucks, as well as applications for air, water and food purification.