MeadWestvaco Corporation and Rock-Tenn Company have entered a definitive combination agreement to create a US$16 billion (AU$20bn) global provider of consumer and corrugated packaging. The combined company will have combined net sales of US$15.7 billion (AU$19.8bn) and adjusted EBITDA of US$2.9 billion (AU$3.66bn), including the impact of US$300 million (AU$378m) in estimated annual synergies to be achieved over three years.
Rock-Tenn is one of North America's leading providers of packaging solutions and manufacturers of containerboard and paperboard, with 27,000 employees in facilities in United States, Canada, Mexico, Chile and Argentina. MWV’s global packaging network of 125 facilities and 15,000 employees spans North America, South America, Europe and Asia, and provides packaging solutions for the healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries.
The agreement has been unanimously approved by the boards of directors of both companies and is expected to close in Q2 2015.
Steven C. Voorhees, chief executive officer of RockTenn, announced, “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.”
John A. Luke, Jr., chairman and chief executive officer of MWV, stated, “We are creating the leading global provider of consumer and corrugated packaging solutions – and generating significant value for both companies’ shareholders. This transaction is a logical step that is borne of our strategic progress and financial success, and it offers MWV shareholders both immediate value and the opportunity to participate in significant upside as the new company generates substantial growth from its market-focused global strategy.”
The new company will achieve a stronger leadership in global consumer and corrugated packaging markets; will gain advantage by blending complementary market positions, innovation, technology, business strategies and organisational capabilities; will increase its global footprint and increase emerging market exposure in North America, Europe, Brazil, India and China; will gain performance advantages with best practices and economies of scale; and intends to invest capital to profitably grow the business and return capital to shareholders.
