The new combined packaging company, which will be named prior to closing which is expected in the second calendar quarter of this year, will be positioned to generate substantial cash flow to deliver superior growth as a consumer and corrugated packaging behemoth.
“We are creating the leading global provider of consumer and corrugated packaging solutions – and generating significant value for both companies’ shareholders,” says John A. Luke, Jr, chairman and chief executive officer of MWV, who will become non-executive chairman of the board of directors of NewCo.
“This transaction is a logical step that is borne of our strategic progress and financial success, and it offers MWV shareholders both immediate value and the opportunity to participate in significant upside as the new company generates substantial growth from its market-focused global strategy.”
Steven C. Voorhees, chief executive officer of RockTenn, adds that the transaction will bring together two highly complementary organizations to create a new, more powerful company in the global consumer and corrugated packaging markets.
“Importantly, our two companies are also an exceptional cultural fit, sharing a commitment to exceeding customer expectations and a focus on developing innovative packaging solutions,” he says.
According to Voorhees, who will serve as chief executive officer and president of the combined company, planning for the integration of the two companies has already started.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, MWV stockholders will receive 0.78 shares of NewCo for each share of MWV held.
Meanwhile, RockTenn shareholders will be entitled to elect to receive either (a) 1.00 shares of NewCo or (b) cash in an amount equal to the volume weighted average price of RockTenn common stock during a five-day period ending three trading days prior to closing for each share of RockTenn held.
The resulting ownership of NewCo will be approximately 50.1% by MWV shareholders and 49.9% by RockTenn shareholders, and based on the shares outstanding today, approximately 7% of RockTenn shares will receive cash in lieu of stock.
The board will be comprised of eight directors from RockTenn and six directors from MWV. Other key executives and their positions will be determined according to their strengths and will be named prior to closing.
The combined company will maintain its principal executive offices in Richmond, Va., and will have operating offices in Norcross, Ga.