IP's Zellerbach-Xpedx Plans: Close 25 Shops, Save $100 Million

International Paper Co. has announced its tentative plans to combine the Zellerbach paper distribution operations it recently acquired from Mead Corp. with its existing Xpedx business unit. The Zellerbach operations were acquired in June at a price of $263 million.

Thomas Costello, IP's sr. VP of distribution and president of Xpedx, explained that the combination plans will expand Xpedx into seven new markets and strengthen its presence in 25 key markets. "It also will greatly enhance our packaging distribution capabilities," he added

Consolidation of the two companies will add $1.2 billion to existing Xpedx sales, bringing the combined annual sales to about $6 billion. As part of the consolidation, the company said it would close more than 25 facilities and eliminate $100 million in operating costs from the combined organization. Details on the merging of redundant facilities will be finalized over the next three months.

Combining the two operations created an operation with 330 distribution centers and 240 retail and wholesale outlets and nearly 10,000 employees. The Zellerbach operations included 30 primary distribution centers and 40 stores serving smaller printing shops in the U.S. As acquired, it had a workforce of around 2,000, with annual sales of more than $1.5 billion. Before the combination, Xpedx had more than 300 distribution locations and 200 stores in 45 states, Mexico, and Europe, and some 7,500 employees.

International Paper, in its 100th year of operation, is a worldwide producer of printing papers, packaging, and forest products. The company also operates specialty businesses in global markets, as well as Xpedx, its distribution business. Headquartered in Purchase, N.Y., the company has operations in 31 countries, employs more than 80,000 people and exports its products to more than 130 nations.