Company name to be revealed later

RockTenn and MWV join to create '$16bn packaging powerhouse'

By Joseph James Whitworth

- Last updated on GMT

The name of the company will be revealed later
The name of the company will be revealed later

Related tags Corrugated packaging Revenue North america

RockTenn and MeadWestvaco (MWV) have joined to create a provider of consumer and corrugated packaging in a transaction with a combined equity value of $16bn.

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

It is targeted to close in the second calendar quarter of this year.

The combined company will maintain principal executive offices in Richmond, Virginia and will have operating offices in Norcross, Georgia.

The combined company, which will be named later, will have combined net sales of $15.7bn and adjusted EBITDA of $2.9bn, including the impact of $300m in estimated annual synergies to be achieved over three years.

CEO’s reaction

Steven C. Voorhees, CEO of RockTenn, said the transaction brings together two organizations to create a more powerful company with leadership positions in the global consumer and corrugated packaging markets.

“This is a terrific opportunity for shareholders, employees and customers of both companies, all of whom stand to benefit enormously from the combination,” ​he said.

“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.”

RockTenn operates in the US, Canada, Mexico, Chile and Argentina.

John A. Luke, Jr., chairman and CEO of MWV, said: “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.”

MWV’s network of 125 facilities and 15,000 employees spans North America, South America, Europe and Asia.

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

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

Management of both companies will host a joint conference call and live webcast today at 9:00am EST to discuss the announcement.

Financial results 

The news was announced moments after both firms had published financial results for the quarter ending December 31.

RockTenn revealed net sales of $2.514m for the first quarter of fiscal 2015 increased $152m compared to the first quarter of fiscal 2014 as a result of sales from theTacoma Milland display acquisitions in fiscal 2014 and higher corrugated and folding carton volumes.

Segment income of $244m increased $9m compared to the prior year quarter.

In Q1 2015, the increase in segment income was primarily due to an estimated $31m in productivity improvements and income from the Tacoma Mill acquisition which were partially offset by increased commodity and other costs across the business.

Voorhees said the Corrugated Packaging business performed well increasing overall shipments by 10.6%, including daily box shipments which increased by 2.5% compared to last year.

For MWV, sales in the fourth quarter of 2014 were $1.37bn compared to $1.31bn in the fourth quarter of 2013.

In the Food and Beverage segment, sales grew 2% to $765m in the quarter compared to $747m in Q4 2013.

Total revenue was up 5% excluding unfavorable foreign currency exchange, there was 6% revenue growth in beverage led by gains in North America and Asia Pacific and 1% revenue growth in food led by gains in North American food service driven by foam cup and container replacement trends.  

Related topics Processing & Packaging

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