International Paper has announced plans to split its business into two independent, separate entities across geographical lines, with each one sharing recently-acquired DS Smith assets.
After acquiring DS Smith in 2024, International Paper has undertaken region-specific strategies and an 80/20 performance system – an approach thought to have strengthened the businesses ‘significantly’ in the North America and EMEA regions.
So far, the company claims to have taken steps towards decentralizing its operations, streamlining its footprint, driving targeted reinvestments, and deploying its lighthouse model across North America to optimize asset networks.
“During the past year, we have created two regional powerhouses with scale, strong customer relationships, leading brands and talented teams,” said International Paper chairman and CEO Andy Silvernail. “The two businesses operate in distinct market environments and are at different stages of their transformation. We have learned a lot about how to create value in each region.”
By separating the business into two separate entities, independent North American and EMEA-based divisions, International Paper aspires to establish an advantaged cost position and provide sustainability-minded packaging solutions to a range of industries.
“The next right step in our transformation journey to achieve full value creation potential is to create two independent, regionally focused companies,” Silvernail continued. “Taking this swift, decisive action now will enable both businesses to reach best-in-class performance and maximize long-term value creation through enhanced focus on their unique opportunities and targeted investment approaches.”
The separation is considered a ‘spin-off’ of the combined EMEA Packaging business to shareholders. EMEA Packaging will operate in thirty countries and comprise a combination of legacy DS Smith and International Paper assets. Its strategy and capital allocation are set to target the specific needs of its EMEA-based customers.
International Paper plans to keep investing in the region to meet market demands, help customers pursue their sustainability goals, and allocate resources to improved services and innovation.
It will also expand its transformation strategy across North America, which is hoped to help the company compound its earnings, grow its cash flows, and bolster shareholder returns.
Additionally, it plans to direct investment towards organic growth, productivity, and disciplined strategic acquisitions while maintaining an investment-grade balance sheet.
International Paper expects to retain a meaningful ownership stake in the new company. It plans to keep investing in the EMEA region throughout 2026, aiming to improve free cash flow and prepare the business to separate with higher margins.
If customary conditions are met, the separation is set for completion in 12-15 months. The new company will reportedly be listed on the London Stock Exchange and New York Stock Exchange, but its capital structure and broader leadership team are yet to be announced.
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