A diverter valve housing has two outlets and one inlet for receiving a flow of air conveying a continuous strip of material, and a diverter duct or tube is pivotally supported within the housing on a pivot axis adjacent the inlet. The diverter tube has an outlet end portion supporting a pair of inclined cutting blades which cooperate with a cutting blade supported by the housing between the outlets for alternately and quickly chopping or cutting the strip of material when the outlet end portion of the diverter tube pivots between the two outlets of the housing. Sealing members connect the diverter tube to the housing and form stops for the diverter tube. A fluid cylinder is pivotally connected to the housing and has a piston rod pivotally connected to the diverter tube for rapidly pivoting the diverter tube between the two outlets.