Deutsche Bank Maintains Buy on MeadWestvaco After Polytop Acquisition

Deutsche Bank has published a research report on MeadWestvaco MWV after the company announced its acquisition of Polytop Corporation on December 30th. In the report, Deutsche Bank writes, "MWV has announced the December 30th acquisition of Polytop Corporation, a manufacturer of dispensing closures. Terms of the deal have not been disclosed. However, we estimate Polytop sales to be in the $50MM/yr range with a low single-digit growth profile. We also estimate EBITDA margins to be in the low-20% range. Assuming an average industry multiple of 6-7x EBITDA, we estimate MWV paid ~$60-70MM for this tuck-in acquisition. Given MWV's strong financial position, we assume the deal was financed using existing cash. The acquisition expands MWV's position in consumer products closures and dispensing systems." Deutsche Bank maintains its Buy rating and $38 price target on MeadWestvaco, which is currently trading down $0.38 from yesterday's $30.42 closing price.