American food packaging manufacturers MeadWestvaco and RockTenn have agreed to merge, a decision approved by the boards of directors of both companies. This was stated in a joint statement by MeadWestvaco and RockTenn. The deal will unite two major players operating in different segments of the packaging business, and a company with a capitalization of $16 billion will be created. The new company does not yet have a name, but it is known that its annual revenue may amount to $15.7 billion, adjusted EBITDA - $2.9 billion.

Under the terms of the agreement, MeadWestvaco will control 50.1% of the combined company, with RockTenn owning the rest. MeadWestvaco shareholders will receive 0.78 shares of the new company for each share they hold. RockTenn shareholders can either exchange their shares for shares of the new company or receive cash compensation for them. The deal is subject to shareholder and regulatory approval, and the companies plan to finalize the formalities in the second quarter of 2015.

MeadWestvaco and RockTenn had natural reasons to merge, the Financial Times writes: they both served the same customers, but offered them different packaging products. MeadWestvaco has an international business making packaging for a wide range of consumer goods (food, drug and cigarette boxes, beverage bottles, perfume bottles), and is one of the largest makers of thin paperboard for breakfast cereals and ice cream cups after Graphic Packaging Holding. RockTenn is the second-largest maker of corrugated cardboard boxes in North America after International Paper Co., which is used to pack pizzas and goods shipped by Amazon.com and other online retailers. MeadWestvaco has not yet published its financial statements for 2014; RockTenn's net sales last year were $9.9 billion.

About 50% of the new company's annual sales will come from corrugated packaging, 43% from consumer packaging, and the remaining 7% from MeadWestvaco's chemicals business, The Wall Street Journal reports. It will be able to produce 13 million tons of packaging paper and will employ 42,000 people in 30 countries.

Following the deal announcement on Monday, shares of both companies on the New York Stock Exchange rose in price: MeadWestvaco shares rose by 6.1% to $66.85 per share, RockTenn shares by 14% to $51.35. Yesterday, according to data as of 20:40 Moscow time, MeadWestvaco shares cost $65.16 (+3.44%), RockTenn shares - $50.27 (+11.61%).

Largest US packaging makers to team up