RockTenn Co. and MeadWestvaco Corp. agree to merge and create a nearly US$16 billion packaging powerhouse supplying a vast range of consumer and food product containers, supported by a network of forest resources, mills and printing facilities.
Headquartered in Norcross, Georgia, RockTenn alone has around 27,000 employees throughout the United States, Canada, Mexico, Chile, Argentina and China. The company is involved with corrugated packaging, merchandising displays, consumer packaging and related recycling.
MeadWestvaco is also a global company that operates in the healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries. It has a network of 125 facilities and 15,000 employees in North America, South America, Europe and Asia.
“This transaction brings together two highly complementary organizations to create a new, more powerful company with leadership positions in the global consumer and corrugated packaging markets,” said Steven Voorhees, CEO of RockTenn. Voorhees is to serve as CEO and President of the newly combined company. John Luke Jr., current Chairman and CEO of MeadWestVaco is to become Non-executive Chairman of the Board of Directors, comprised of eight directors from RockTenn and six directors from MeadWestVaco.
The transaction requires the approval of shareholders of both companies and is subject to regulatory approvals. If approved, the merger will create a company, to be named prior to closing, with a combined equity value of US$16 billion – based on net sales of US$15.7 billion and adjusted EBITDA of US$2.9 billion, including the impact of $300 million in estimated annual synergies to be achieved over three years.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, MeadWestvaco stockholders will receive 0.78 shares of the new company for each share they currently hold. RockTenn shareholders will be entitled to elect to receive either 1.00 shares of the new company or cash in an amount equal to the average price of RockTenn common stock during a five-day period before closing.
The resulting ownership of the new company will be approximately 50.1 percent by MeadWestvaco shareholders and 49.9 percent by RockTenn shareholders. Based on the shares outstanding today, approximately seven percent of RockTenn shares will receive cash in lieu of stock. The parties also plan to spin-off of MeadWestvaco’s specialty chemicals business after completing the merger. The specialty chemicals are produced for the automotive, energy and infrastructure industries.
In Canada, RockTenn’s current presence includes containerboard mills in La Tuque, Quebec, as well as container plants in Calgary, Alberta; Guelph, Ontario; Milton, Ontario; and Regina, Saskatchewan. It has display merchandising locations in Etobicoke (manufacturing), Montreal (assembly) and Toronto (assembly), as well as prepress facilities in Mississauga, Ontario, and Richmond, British Columbia. RockTenn also has a food-board plant in Montreal, QC, folding carton facilities in Candiac and Ste-Marie, QC, as well as a partitions operation in Pickering, Ontario.