MeadWestvaco spins off specialty chemicals business

In the pine chemicals world, MeadWestvaco (MWV), a major packaging company, announced its intention to spin-off its specialty chemicals business as an independent publicly traded entity.  The spinoff is expected to be completed by the end of 2015. MWV reported that it remains open to other value-creating alternatives for the specialty chemicals business throughout this process.

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. In conjunction with the separation of the specialty chemicals business, MWV is undertaking a comprehensive organization redesign to accelerate its market-focused packaging strategy and achieve market-leading margins.

MWV’s specialty chemicals business manufactures, markets, and distributes specialty chemicals derived from sawdust and other byproducts of the papermaking process. Approximately two-thirds of the revenue is derived from pine chemicals used for a variety of applications in printing inks, asphalt paving, adhesives, and lubricants. The remaining one-third is from wood-based activated carbon used for emission control systems for automobiles, industrial processes, and food and water purification.

For a brief background on pine chemicals, here is an interesting video from MWV and the Pine Chemicals Association. By the way, like the oleochemical industry, the pine chemical industry does not like biodiesel subsidies. Find out why in this video.