MeadWestvaco Corp., which has longstanding ties to the Charleston area, and Rock-Tenn Co. announced a $16 billion merger Monday that will create one of the world’s largest providers of consumer and corrugated packaging materials.
The merger, which still needs approval from regulators and shareholders, is expected to close by July 1. The deal would give MeadWestvaco shareholders 50.1 percent ownership of the new company, which has not yet been named.
The merger isn’t expected to affect MeadWestvaco’s plans, announced earlier this month, to spin off its North Charleston-based specialty chemicals division into a separate company. That division, which makes wood-based chemicals for the automobile and other industries, is MeadWestvaco’s second-largest subsidiary based on revenue with sales of $800 million during the third quarter of 2014.
The merger’s impact on MeadWestvaco’s development and land management division, based in Summerville, hasn’t been determined.
“While the integration planning between the two companies (MeadWestvaco and Rock-Tenn) will only just be beginning now, we remain committed to our land business and believe it can create significant value for the company and for the local community,” said MeadWestvaco spokesman Tucker McNeil.
The packaging business merger between Richmond, Va.-headquartered MeadWestvaco and Rock-Tenn, of Norcross, Ga., is expected to result in annual cost savings to the companies of $300 million, though officials did not say if the savings would include job cuts at any of their locations around the world.
Steven Voorhees, chief executive officer of Rock-Tenn, will serve as CEO of the combined company. John Luke Jr., chairman and CEO of MeadWestvaco, will become nonexecutive chairman of the new company’s board of directors.
The combined company will maintain its principal executive offices in Richmond and will have operating offices in Norcross, which is northeast of Atlanta.
“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,” Voorhees said in a statement.
Over the last several years, MeadWestvaco has gone from a mill-centric paper supplier to a global packaging maker for brands like Procter & Gamble, Coca-Cola and Wal-Mart. The company sold its Cooper River paper mill, located on property across from the chemicals division, in 2008.
Monday’s announcement boosted shares of both companies, with Rock-Tenn stock climbing more than 6 percent and MeadWestvaco shares advancing 14 percent by the market’s close.
Rock-Tenn has 27,000 employees with locations in the U.S., Canada, Mexico, Chile and Argentina. MeadWestvaco has 15,000 workers at 125 locations throughout North America, South America, Europe and Asia.
The Associated Press contributed to this report.
Reach David Wren at 937-5550 or on Twitter at @David_Wren_