International Paper Tumbles on Plan to Spin Off Europe Business

International Paper Co. plans to break up and spin off its European packaging business in a significant shift for the 128-year-old company as it seeks to strengthen operations amid a weak global economy.

Memphis-based IP will create two independent, publicly traded companies, it said in a statement Thursday, confirming an earlier Bloomberg News report. The plan failed to impress investors, though, as the company’s shares tumbled as much as 9.7%, the most since Oct. 30.

The move comes less than two years after IP, which was founded in 1898 through the combination of 17 pulp and paper mills, rebuffed ...