Eight Diamonds Advisors
Special situations, event-driven, contrarian, research analyst

International Paper's Spin-Off And Its Subsequent Merger Creates Veritiv, A Prime Short Candidate

Executive summary

In 1999, Georgia-Pacific Corporation ("Georgia-Pacific") bought Unisource Worldwide ("UWW") for USD842.4 million in cash plus about USD400 million in assumed debt. About three years later, in 2002, Georgia-Pacific sold a 60% stake in UWW to Bain Capital.

Fast forward nearly 12 years, to June 2014, and UWW's parent, UWW Holdings, Inc. ("UWWH"), is merging with International Paper's (NYSE:IP) distribution solutions business spin-off ("xpedx") to form Veritiv (NYSE:VRTV). This merger essentially brings back to the stock market a company, UWW that has a long history of shareholder value destruction. It also provides Bain Capital and Georgia-Pacific with a potential backdoor exit creating a large stock overhang.

VRTV's prospectus filing reveals that UWWH and its subsidiaries...

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