The Rock-Tenn Co. paper recycling giant will merge with MeadWestvaco to form a $15.7 billion manufacturer of cardboard cartons, boxes and corrugated paper, officials announced Monday.
Rock-Tenn, which is based in Norcross, Ga., boasts 27,000 employees and 200 facilities nationwide, including large facilities in St. Paul and Minneapolis. It is well known for making cereal boxes for General Mills.
Virginia-based MeadWestvaco has 15,000 workers and 120 facilities nationwide. It makes coated and industrial paperboard.
News of the mega-paper union landed on a hectic Monday in the mergers and acquisitions world. Ireland's high court approved a controversial, $49.9 billion, tax-saving acquisition of Dublin-based Covidien by Fridley-based Medtronic, and the Post Holdings cereal guru said it would buy Lakeville-based Malt-O-Meal Brands for $1.15 billion.
If the Rock-Tenn merger is approved by regulators and shareholders, as expected, it should close later this year to create a behemoth with $15.7 billion in sales, $2.9 billion in pretax earnings and $300 million in cost-cutting opportunities. The entity will have a blend of customers such as Coca-Cola Company, Unilever, Procter & Gamble and others in the U.S., India and Brazil.
Under the terms of the merger, MeadWestvaco's shareholders will own 50.1 percent of the combined firm, while Rock-Tenn shareholders will hold 49.9 percent. Rock-Tenn will contribute eight directors to the new board, while MeadWestvaco will contribute six. Rock-Tenn CEO Steven Voorhees will become CEO of the merged entity. MeadWestvaco CEO, John Luke Jr., will become chairman of the board.
Rock-Tenn's stock price jumped 6 percent, or $3.86 a share, to close at $66.85 a share Monday.
MeadWestvaco's stock bolted 14 percent, or $6.31 a share, to close at $51.35 a share Monday.
