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RockTenn merging with MeadWestvaco

RockTenn Company and MeadWestvaco Corporation announced plans earlier this week to merge, creating the second largest packaging company in the world.

RockTenn has operated a mill in Demopolis since 1957.

The deal will bring together two companies that serve different segments of the packaging business.

The merger will create a company that will supply containers for a variety of products.

RockTenn manufactures corrugated boxes used for items like pizza delivery boxes or express delivery packages. MeadWestvaco makes thinner paper cartons for products such as ice cream or breakfast cereal.

“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,” Steven C. Voorhees, chief executive officer of RockTenn. “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 realize the full value of cost synergies we have identified.”

In a joint statement released earlier this week, company officials said the cash-and-stock transaction will give shareholders of MeadWestvaco 50.1 percent of the new company and investors in RockTenn will hold the rest.

“We are creating the leading global provider of consumer and corrugated packaging solutions – and generating significant value for both companies’ shareholders,” said John A. Luke, Jr., chairman and chief executive officer of MWV. “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.”

According to company officials, the new company will have estimated annual earnings before interest, taxes, depreciation and amortization of $2.9 billion on sales of $15.7 billion. Annual consumer-packaging sales will be $6.8 billion while sales of corrugated boxes will be about $7.8 billion.

Voorhees will serve as chief executive officer and president of the combined company, and Luke will become non-executive chairman of the board of directors.

The board will be comprised of eight directors from RockTenn and six directors from MWV.

Other key executives and their positions will be determined according to their strengths and will be named prior to closing.

The combined company will maintain its principal executive offices in Richmond, Va., and will have operating offices in Norcross, Ga.

The transaction requires the approval of shareholders of both MWV and RockTenn and is subject to receipt of certain regulatory approvals and other customary closing conditions.

Officials with the two companies expect the closing to be finalized in the second calendar quarter of this year.