Corrected-update 1-genuine Parts to Merge S.p. Richards ...

(Corrects second paragraph to show $347 million payment is to GPC and not GPC shareholders)

April 12 (Reuters) - Genuine Parts Co said on Thursday it would spin off its wholesale distribution business S.P. Richards into a separate company and merge it with peer Essendant in a deal structured as a Reverse Morris Trust.

GPC said the deal implied a valuation of about $680 million for S.P. Richards. Genuine Parts will get $347 million in cash and its shareholders 51 percent of the newly-formed combined company.

The combined company will be called Essendant and headed by Essendant's chief executive officer Ric Phillips. S.P. Richards CEO Rick Toppin will be the chief operating officer of the new company. Essendant had a market capitalization of about $323.5 million as of Wednesday's close.

The company also said that the structure of the deal, which is expected to close before the end of this year, meant that it would be tax free for the companies' shareholders.

Atlanta, Georgia-based S.P. Richards distributes a range of products, including office furniture, computer supplies and school supplies, to resellers in the United States and Canada.

Essendant is a wholesale distributor of workplace items including janitorial supplies, disposable cups, plates and utensils and office furniture among others.

Citigroup Global Markets Inc was the financial adviser for Essendant while J.P. Morgan was the financial adviser to Genuine Parts. (Reporting by Arunima Banerjee in Bengaluru; editing by Patrick Graham)

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