MeadWestvaco plans to spin off specialty chemicals business

Richmond-based packaging company MeadWestvaco Corp. (MWV) announced Thursday plans to spin off its specialty chemicals business by the end of 2015.

“Following a thorough strategic review process, MWV’s board and leadership team determined that a tax-free spinoff of Specialty Chemicals presents the best opportunity to create the greatest value for our shareholders,” John A. Luke Jr., MWV’s chairman and CEO, said in a statement.

MWV said in a news release its open to “other value-creating alternatives” for the specialty chemicals business, which among other things, makes chemicals used in printing inks, asphalt paving and adhesives, as well as in the agricultural, paper and petroleum industries.

MWV will receive cash from the spinoff that will mostly be used to pay down debt to maintain its investment-grade credit rating. The company says it will to continue to pay a dividend, with the final rate to be determined after the spin off.

In the third quarter ended Sept. 30, 2014, MWV’s specialty chemical unit had sales of $283 million, up 9 percent from the same quarter in 2013.  The unit’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 4 percent to $77 million in the third quarter 2014, compared to $74 million in the third quarter of 2013.