MeadWestvaco, Rock-Tenn to Christen New Company WestRock

Loading...
Loading...

MeadWestvaco Corporation MWV and Rock-Tenn Company RKT have decided to name the company that'll be formed after their merger as WestRock Company.  WestRock will trade on the New York Stock Exchange under the ticker symbol WRK.

On Jan 26, Rock-Tenn and MeadWestvaco entered into a definitive merger agreement. The transaction is on track to close in the second quarter of 2015. The companies have received antitrust approval in the United States while other regulatory and shareholder approvals are pending.

The deal is of considerable significance in the packaging industry as WestRock will be the second-largest U.S. packaging company valued at $16 billion. International Paper Company IP is currently at the top of the podium with a market capitalization of $22.6 billion.

MeadWestvaco shareholders will receive 0.78 shares of the combined company for each share they own. Rock-Tenn shareholders will be allowed to choose either one share of the combined company or a specific cash amount for each Rock-Tenn share held.
 
Earlier in March, both the companies declared the leadership team for the combined company that will execute core strategies and help generate substantial shareholder value. Ward Dickson, the current executive vice president and chief financial officer ("CFO") of Rock-Tenn, will become the CFO of WestRock. Voorhees, the current chief executive officer ("CEO") of Rock-Tenn will serve as CEO and president of WestRock, and Luke, the junior chairman and CEO of MeadWestvaco will become non-executive chairman of the board.

WestRock is expected to generate net sales of $15.7 billion and adjusted EBITDA of $2.9 billion. This includes the impact of $300 million in estimated annual synergies, to be achieved over three years.

However, the deal has its inherent risks. Failure to complete the merger could adversely affect MeadWestvaco's business and its share price. The company will also continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the merger.

Additionally, MeadWestvaco will be subject to business uncertainties and contractual restrictions while the transaction is pending. The combination agreement restricts both the companies from making particular acquisitions and expenditures, entering into certain contracts, and taking other specified actions without the consent of the other party until the merger occurs. These restrictions may prevent MeadWestvaco from pursuing attractive business opportunities that can arise prior to the completion of the merger.

MeadWestvaco currently carries a Zacks Rank #3 (Hold).

Earlier this month, another major deal took place in the food-packaging industry in which the glass container maker, Owens-Illinois, Inc. OI agreed to buy the food and beverage glass container business of Mexican company, Vitro, for $2.15 billion. The deal will provide Owens-Illinois a competitive edge in the attractive and growing glass segment of the packaging market in Mexico, further solidifying its position as the world's leading glass container producer.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report


MEADWESTVACO CP MWV: Free Stock Analysis Report

INTL PAPER IP: Free Stock Analysis Report

OWENS-ILLINOIS OI: Free Stock Analysis Report

ROCK-TENN CO RKT: Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research
Loading...
Loading...
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...