The End of the Line for MeadWestvaco – January 2015 M&A Activity

Paper and packaging industry giant MeadWestvaco appears to be at the end of its life as an independent entity. The company agreed to a merger with RockTenn to form a yet-to-be-named successor company. RockTenn’s expertise in kraft paper, corrugated cartons and retail displays will combine with MeadWestvaco’s strengths in paperboard and folding cartons. The result will be a powerful player in the increasingly global packaging industry, with over $15 billion in annual revenues.

In apparent preparation for the deal with RockTenn, earlier in the month MeadWestvaco announced the spinoff of its chemical business into a separate public company. Only four days before the merger with RockTenn was announced, MeadWestvaco sold it European tobacco and confectionary folding carton packaging units to Sweden-based AR Packaging Group. That deal has the appearance of a fire-sale in today’s hot market for packaging-related acquisitions, selling at only 3.9 times trailing EBITDA, less than 50% of revenues.