International Paper in Talks About Combination of xpedx and Unisource

April 22, 2013 (Press Release) - International Paper announced today it is in talks with Unisource regarding a proposed business combination of xpedx, International Paper's distribution business, and Unisource. Both xpedx and Unisource are business-to-business distributors of printing, packaging and facility supplies. The discussions were initiated when Unisource approached International Paper about a possible merger, and on April 19, 2013, the parties entered into a non-binding letter of intent to explore a possible transaction.

The letter of intent outlines a "Reverse Morris Trust" transaction in which International Paper would contribute the assets of xpedx to a newly-formed corporation, and receive a cash dividend financed with debt in the new corporation's capital structure. This new corporation would be spun off to International Paper shareholders and immediately thereafter merged with Unisource in a transaction intended to be tax-free to International Paper and its shareholders.

The amounts of the relative ownership in the merged company by International Paper and Unisource shareholders, and the amount of the dividend payment to International Paper, are the subject of further negotiations between the parties. Following the spin-off and merger, the new company would be an independent publicly traded corporation with a majority of independent directors. Some combination of current xpedx and Unisource management is expected to lead the new company.

John Faraci, Chairman and CEO of International Paper said he sees considerable potential in the merger. "This is a unique opportunity for xpedx and Unisource to create a new company that is stronger, more competitive and provide even greater value to customers. Both companies are well-run, with a lot of talented employees and a good customer base."

The parties have agreed to negotiate exclusively with each other for a period of time until a definitive agreement can be reached or the parties terminate the letter of intent.

No assurances can be made that the parties will reach agreement on a mutually acceptable transaction or that the transaction, if completed, will be on the terms outlined in the letter of intent. If no agreement on the transaction can be reached, xpedx will continue to operate as a division of International Paper. International Paper does not intend to seek alternative transactions for xpedx.

Subject to applicable laws and regulations, the parties do not intend, and undertake no obligation, to provide updates or make further statements regarding these discussions or the potential transaction until the letter of intent is terminated, or until a definitive agreement is reached. The process to complete a transaction could take up to 12 months.

International Paper (IP) is a global leader in packaging and paper with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include industrial and consumer packaging and uncoated papers, complemented by xpedx, the company's North American distribution company. Headquartered in Memphis, Tenn., the company employs approximately 70,000 people and is strategically located in more than 24 countries serving customers worldwide. International Paper net sales for 2012 were $28 billion. For more information about International Paper, its products and stewardship efforts, visit internationalpaper.com.

SOURCE: International Paper