Mead, Westvaco Join Forces
STAMFORD, CT—The long-awaited paper merger has finally become a reality. Only the participants are a bit surprising.
No, Weyerhaeuser did not acquire Willamette. That should take a while. And it wasn't International Paper and Stora Enso (see Paper Mill Watch), which for now is only a rumor.
How about Mead Corp. and Westvaco Corp.?
On August 29 the companies jointly announced a $3 billion merger, with a combined annual revenues total of $8 billion. The newly created company will be called MeadWestvaco Corp. and will be headquartered here. The move essentially launches MeadWestvaco from mid-sized player into worldwide competition with IP and Georgia-Pacific.
Under terms of the transaction, Mead shareholders will receive one share of MeadWestvaco stock for each share of Mead stock, and Westvaco shareholders will receive 0.97 shares of MeadWestvaco stock for each share of Westvaco stock. The merger is structured as a stock-for-stock, tax-free exchange, and will be accounted for as a purchase transaction under the recent guidelines for business combinations. The deal has been approved by both boards.
Jerry Tatar, the chairman, president and CEO of Mead, will serve as chairman of the new company. John A. Luke Jr., chairman and CEO of Westvaco, will serve as president and CEO of MeadWestvaco. Both factions will have equal representation on the new board of directors.
"This is a strategically and financially compelling merger of equals that creates a stronger company, well-positioned to compete in a global industry," Tatar and Luke commented in a joint statement. "In joining these two organizations, we enhance our ability to deliver shareholder value, offer customers a broader array of high-quality, value-added products, and provide employees an opportunity to participate in an even more dynamic enterprise. We look forward to working together to realize the full potential of the new company.