MeadWestvaco to separate speciality chemicals business

US-based MeadWestvaco (MWV) has received approval from its board of directors to proceed with its planned separation of its speciality chemicals business.

 

The approval comes after a thorough strategic review process, the company said.

 

MWV's speciality chemicals business produces chemicals used in printing inks, asphalt paving and adhesives, as well as chemicals used in the agricultural, paper and petroleum industries.

 

For the quarter ended 30 September 2014, the chemicals business generated revenues of $283m, representing 19% of MWV's total revenues.

 

Planned to be completed by the end of this year, the tax-free transaction will create two independent, publicly-traded companies.

 

MWV chairman and CEO John Luke said: "This action continues our strong record of returning value to our shareholders, which has exceeded $4bn over the last ten years.

 

"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 company said it will evaluate other alternatives for the chemical segment during the process.

 

The latest decision follows activist investor Starboard Value's suggestion that MWV should separate its non-core assets.

Starboard recently increased its stake in MWV to 6.1% from its previous 5.6%.

 

MWV plans to use the proceeds from the business separation to pay debt.

 

Bank of America Merrill Lynch and Goldman, Sachs and Co are providing financial advisory services to MWV for the transaction.