MeadWestvaco Will Spin Off Chemicals

Under pressure from an activist investor, paper and packaging maker MeadWestvaco will spin off its specialty chemical operations to shareholders by the end of 2015.

MWV’s chemical business makes activated carbon as well as asphalt paving, pine, and oil-field chemicals. Most of the chemicals the firm provides are derived from sawdust and other by-products of the papermaking process.

The chemical business had revenues of $980 million in 2013, ranking it number 43 on C&EN’s list of the Top 50 U.S. chemical firms. It was also a highly lucrative outfit, posting an operating profit of $229 million, or 23% of sales. Coatings resin maker Reichhold ranked 42, and coal chemicals maker Koppers ranked 44 in the 2013 survey.

The newly independent specialty operations will continue to be based in Charleston, S.C. MWV is based in Richmond, Va.

The separation will create two companies better positioned to grow in their targeted markets, says MWV Chairman John A. Luke Jr. MWV will continue to focus on its $4.4 billion-per-year packaging operation.

However, Luke had some help coming to that conclusion. Last June, Starboard Value, an activist investment firm, urged Luke to “explore a separation” of the firm’s noncore assets, including chemicals.