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.

MeadWestvaco itself was born in 2002 from the combination of Westvaco, a descendant of the West Virginia Pulp and Paper Company, and The Mead Corporation, founded in 1846 by Colonel Daniel Mead to produce book papers in Dayton, Ohio. Prior to their merger, these two companies produced some of the workhorse papers of the commercial printing industry, Sterling from Westvaco and Mead Offset Enamel (or as we used to call it, simply “EmOhEee”). IN 2005, MeadWestvaco sold off its printing papers unit to Cerberus Capital Management to form NewPage, which itself ceased to exist earlier this month with the completion of its sale to Verso.

Packaging & Labels

Multi-Color Corporation, a frequent entry on the buy-side in our deal logs, was back again with its acquisition of a relatively small ($15 million revenue) producer of premium wine and spirit labels in Daventry, UK. In an apparently prescient branding decision, the target company is named Multi Labels.