MeadWestvaco’s board has approved plans to spin off its specialty chemicals business into a separate, publicly traded company, which would include a plant in southwest Louisiana.
“The separation of specialty chemicals will establish two strong companies that are better positioned to compete and profitably grow in their targeted markets,” Chairman and CEO John A. Luke Jr. said in a statement on Thursday.
The company’s website shows only one plant in Louisiana that’s in its specialty chemicals division, a facility in DeRidder. The plant spans about 250 acres and employs nearly 200 people. It manufactures resin for publication inks, tackifiers for adhesives and rosin derivatives for paper, plus additives used in soaps and detergents, coatings, dimers and mining. Its derivatives also are used in the oilfield drilling market, and residuals are used in the fuels and firelog markets.
MeadWestvaco said it is open to other value-creating options for its specialty chemicals business during the separation process. The Richmond, Virginia-based company also said it anticipates receiving cash from the spinoff that will mostly be used to pay down debt to maintain its investment-grade credit rating.
The spinoff is expected to be completed by year’s end.
MeadWestvaco’s news is similar to an announcement by The DuPont Co. in 2013 that it was spinning off its performance chemicals unit. Its shares have risen more than 18 percent over the past year.