International Paper Unveils Major Split: To Form Two Regional Packaging Giants
MEMPHIS, Tenn. – International Paper (NYSE: IP) has charted a decisive new course, announcing during its fourth-quarter earnings call a plan to cleave itself into two distinct, regionally focused packaging powerhouses. The move, framed as the culmination of its "80/20" performance strategy, aims to create sharper, more agile market leaders tailored to the divergent dynamics of North America and Europe, the Middle East, and Africa (EMEA).
"We are creating two publicly traded, scaled leaders," stated CEO Andy Silvernail, outlining the rationale behind the seismic shift. "The competitive landscapes, customer needs, and capital allocation priorities in North America and EMEA are fundamentally different. This separation allows each entity to pursue strategies with precision and focus." The decision follows a year of operational simplification and portfolio pruning, setting the stage for what the company calls "targeted scale."
Chief Financial Officer Lance Loeffler provided the financial blueprint, indicating the separation is expected to be executed as a tax-efficient spin-off of the EMEA Packaging business to International Paper's shareholders. The parent company would retain a "meaningful ownership stake" in the new entity. Pending regulatory approvals and final structuring, the transaction is slated for completion within 12 to 15 months, with the new EMEA company pursuing dual listings in London and New York.
Leadership teams are already taking shape. Silvernail, Loeffler, and Tom Hamic will remain at the helm of the North American company. Tim Nicholls, currently Executive Vice President and President of the recently integrated DS Smith operations, is slated to become CEO of the standalone EMEA business. David Robbie is expected to be appointed Chairman of the EMEA board.
The financial contours of the future entities came into clearer view. Pro forma figures for 2025 position the North American company with net sales exceeding $15 billion and adjusted EBITDA of approximately $2.3 billion. The EMEA business, described by Nicholls as a "leader in innovative, sustainable packaging," showed pro forma net sales of about $8.5 billion with adjusted EBITDA of $800 million. Management plans to invest roughly $400 million in EMEA during 2026 to fuel its ongoing transformation.
The call also served as a report card on the aggressive 80/20 restructuring. In North America, adjusted EBITDA grew approximately 37% year-over-year in 2025, supported by over $500 million in run-rate cost benefits. In EMEA, the transformation involved 20 site closures affecting 1,400 roles, with further consultations underway, actions expected to yield over $160 million in savings.
Looking ahead, management expressed confidence in its 2026 targets. The North American business is guided to an adjusted EBITDA of $2.5 to $2.6 billion, while enterprise-wide sales are projected between $24.1 and $24.9 billion. However, near-term challenges persist, including a potential $20-$25 million headwind from a recent U.S. winter storm and ongoing inflationary pressures.
Market Voices:
"This is a long-overdue move that unlocks significant value," commented Michael Thorne, portfolio manager at Hartford Capital. "The market has struggled to value a geographically blended entity. Now, investors can choose pure-play exposure to the robust North American industrial economy or the turnaround-and-consolidation story in Europe. The pro forma numbers look compelling."
"The human cost is buried in the EBITDA figures," countered Sarah Chen, analyst at the Ethical Investment Forum, her tone sharp. "Celebrating 'site closures' and 'role impacts' while touting cost savings is a brutal calculus. They're talking about over 2,000 families disrupted to please shareholders. This isn't just a strategic split; it's a stark reminder of where corporate priorities truly lie."
"Operationally, it makes perfect sense," observed David Riggs, a veteran packaging industry consultant. "Running pan-Atlantic operations is incredibly complex. This allows the North American team to double down on service and box plant optimization—their 'Lighthouse' model is yielding results—while letting EMEA manage its unique energy, fiber, and customer landscape without compromise. Execution on the separation timeline is now the key watchpoint."
Founded in 1898 and headquartered in Memphis, International Paper is one of the world's largest producers of renewable fiber-based packaging, pulp, and paper. The proposed split aims to secure its legacy by creating two nimbler successors, each tasked with dominating its home region.