International Paper and DS Smith are separating into two independent companies following their operational integration across North America and Europe.
IP CEO Andrew K. Silvernail said the move positions each regional segment at “a positive inflection point.” The separation, which is occurring less than two years after the Memphis, Tennessee-based company acquired DS Smith, enables growth optimization by focusing on distinct regional market dynamics and customer needs.
“Taking this action will allow both businesses to accelerate progress toward maximizing long-term profitable growth to greater speed, agility and differentiation, as well as enhanced focus on the different regions and targeted investment approaches,” he said.
The move is aligned with IP’s 80/20 roadmap, a strategy Silvernail said aims to “simplify, segment, resource, and grow and ensure that resources are focused on the highest value areas across geographies, customers and products.”
Each standalone company will pursue tailored strategies aligned with its regional market characteristics, which were detailed in a recent investor call.
North American expansion
IP’s Packaging Solutions portfolio, which comprises both legacy and DS Smith assets, will continue to serve the industrial packaging, consumer packaging, and printing paper markets with packaging solutions and will expedite its “transformational” strategy in the North American region.
Building on operational improvements from its lighthouse deployment model, IP will focus post-separation investments on innovation, quality and productivity enhancements. The strategy aims to compound earnings and grow cash flows while maintaining financial flexibility for organic growth and strategic M&A, according to the company.
“Creating independent companies will further enable the businesses to win distinctive competitive markets through focused leadership, tailored commercial strategies, independent balance sheets and flexible capital allocations aligned to attractive but different regional opportunities,” Silvernail said.
He added that “the business that will become a standalone IP had full year 2025 net sales, more than $15 billion and approximately $2.3 billion of adjusted EBITDA that is poised to accelerate rapidly over the next 24 months.”
While IP focuses on the North American market, the European operation presents its own strategic direction.
EMEA activity accelerates
The standalone DS Smith will operate IP’s Packaging Solutions EMEA business across 30 countries, leveraging combined legacy assets from both companies.
The EMEA business generated full-year 2025 net sales of approximately $8.5 billion and adjusted EBITDA of approximately $800 million.
“We are still at an early stage of transformation to optimize our footprint, structurally reduce cost and extend our innovation leadership,” said Tim Nicholls, president of DS Smith.
IP began implementing its 80/20 plans for the EMEA Packaging market in 2025, a strategy aimed at operational efficiency, cost reduction, product and service innovation and targeted reinvestments, the company stated, adding that it is targeting further investments in the region to align with its methodology and “separate with higher margins and improving free cash flow.”
Nicholls said the company will see the benefits of separation beginning in 2026, adding that “the separation will enable us to accelerate this progress, enhancing the new company’s ability to make both organic and inorganic investments into our business to improve our cost position further and enhance customer experience and relative supply position.”
Mill closures signal growth
Driving the transformation of its 80/20 strategy is IP’s strategic mill closures.
Lance T. Loeffler, IP CFO, said that its packaging segment in the EMEA region is evolving, with 20 site closures in 2025, a move that impacted nearly 1,400 workers. Another seven sites and 700 roles are under discussion with the work council, he added.
“We have a clear road map for applying our commercial and structural cost levers and expect to see the benefits of our cost and commercial actions accelerate through 2026.”
In North America, IP previously announced the closure of a box plant in Edinburg, Texas and mentioned plans to move production to facilities in McAllen, Texas, and Reynosa, Mexico, and to convert the sheet paper plant into a warehouse in early 2025.
The company made additional shifts in June 2025, exiting the molded fiber business, converting its Reno, Nevada, facility to support its packaging business, and shuttering its packaging facility in Marion, Ohio, and a recycling facility in Wichita, Kansas. IP also sold its containerboard mill in Xalapa, Mexico and its recycling plants in Xalapa and Apodaca, Mexico.
“The cost out benefit from the mill closures was offset by timing of spending across the business, including transitory costs as we optimize our network in line with our new footprint, as well as higher seasonal labor costs,” Loeffler said.
Loeffler also commented on the impact of mill closures on its workforce.
“We expect this to deliver run rate cost savings of more than $160 million,” he said. “At the same time, it’s important to recognize these actions affect people and their families. We do not make these decisions lightly, and I want to thank the employees across these facilities and offices for their professionalism, dedication, and contributions to the company.”
The separation is expected to be completed in 12-15 months, barring customary conditions and final approval.
