MeadWestvaco, Rock-Tenn Announce Merger Completion Date

MeadWestvaco Corporation MWV and Rock-Tenn Company RKT have announced a date for special meetings of their respective shareholders to approve their previously announced merger, which is likely to be completed by Jul 1, 2015. Shares of MeadWestvaco gained 1.15% on the news.

Following the merger, MeadWestvaco and RockTenn will become subsidiaries of WestRock Company, the new company that will be formed from their combination, as named by the former two earlier this month. WestRock will trade on the New York Stock Exchange under the ticker symbol "WRK".

The MeadWestvaco meeting of stockholders will be held on Wednesday, Jun 24 in Richmond, VA; while the meeting of Rock-Tenn's shareholders will be held on Wednesday, Jun 24 in Atlanta, GA.

At the meeting, shareholders will be asked to consider and vote on proposals to approve the transaction and related proposals. The approval of each company's shareholders is required to complete the merger agreement announced by the companies on Jan 26, 2015.

WestRock will be the second-largest U.S. packaging company valued at $16 billion trailing International Paper Company IP with a market capitalization of $22.4 billion. 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.

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