Rock-Tenn, MeadWestvaco to merge, create packaging giant

Mon Jan 26, 2015 1:48pm EST
 
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By Sagarika Jaisinghani

(Reuters) - Packaging companies Rock-Tenn Co RKT.N and MeadWestvaco Corp MWV.N agreed to form a combined $16 billion company to take on market leader International Paper Co IP.N in the United States and abroad.

Shares of MeadWestvaco and Rock-Tenn rose to record highs.

Demand for the corrugated boxes made by both companies has risen sharply as internet shopping has taken off. Worldwide e-commerce sales are expected to have risen 20 percent to $1.5 trillion last year, according to industry data firm eMarketer.

The merger, announced by both companies on Monday, will create the second-largest U.S. packaging company behind International Paper, which has a market capitalization of nearly $23 billion.

MeadWestvaco shareholders will have a 50.1 percent stake in the new company, which will be named before the deal closes and based in Richmond, Virginia, where MeadWestvaco is headquartered.

"There's significant opportunity around the world for us to grow as we see more activity in emerging markets," MeadWestvaco Chief Executive John Luke said on a call with analysts, citing India, Brazil and China as growth regions.

MeadWestvaco shareholders will receive 0.78 shares of the new company for each share held.

Rock-Tenn shareholders can receive either one share of the new company for each share held or a cash amount equal to the average price of Rock-Tenn shares over a five-day period ending three trading days before the deal closes.   Continued...

 
MeadWestvaco Corporation global headquarters in Richmond, Va. are seen in this undated handout photo. REUTERS/MeadWestvaco