US packaging companies hope to become a leading global provider
Two US packaging companies have entered into a combination agreement in a transaction with a combined equity value of $16bn.
MeadWestvaco Corporation (MWV) and RockTenn will join together in a transaction, which is estimated to generate total annnual synergies of $300m over three years.
The combined company, the name of which will be decided upon when the deal is closed, aims to become a leading global provider of consumer and corrugated packaging; it will have a combined net sales of $15.7bn and adjusted EBITDA of $2.9bn.
The agreement was unanimously approved by both companys’ Boards of Directors. MWV stockholderes are said to recieve 0.78 shares of the new company for each share of MWV already held. Meanwhile, RockTenn shareholders will be able to choose whether they want to recieve either 1.00 shares of the new company, or cash in an amount equal to the volume weighted average price of RockTenn common stock during a five-day period.
Steven Voorhees, Chief Executive Officer of RockTenn, said: “This transaction brings together two highly complementary organisations to create a new, more powerful company with leadership positions in the global consumer and corrugated packaging markets. This is a terrific opportunity for shareholders, employees and customers of both companies, all of whom stand to benefit enormously from the combination. Importantly, our two companies are also an exceptional cultural fit, sharing a commitment to exceeding customer expectations and a focus on developing innovative packaging solutions. Planning for the integration of these two companies has already started and we expect to expeditiously realise the full value of cost synergies we have identified.”
Voorhees will serve as Chief Executive Officer and President of the new company, while John Luke, Jr, currently Chairman and Chief Executive Officer of RockTenn will become Non-executive Chairman of the Board of Directors.