Mead and Westvaco combine in $10 Billion merger
5 Sep 2001
The Mead Corporation and Westvaco Corporation have agreed to merge, creating a global paper and chemicals company with a value in excess of $10 billion.
The new company, which will be called MeadWestvaco Corporation, will have $8 billion in annual revenues and four core businesses.
Under the 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.
Mead shareholders will also receive a special payment of $1.20 per share at closing. The merger is structured as a stock-for-stock tax-free exchange, and will be accounted for as a purchase transaction. The transaction has been approved by both Boards of Directors.
The combined company's expected $325 million in cost synergies will be achieved principally in coated papers, packaging, purchasing and logistics, corporate overhead and information technology.
The new company's annual common stock dividend is expected to be $0.92 per share, providing a 24 cents per share annual dividend increase to Mead shareholders and a consistent dividend to Westvaco shareholders, on an exchange ratio-adjusted basis.
The companies expect to close the transaction, subject to customary shareholder and regulatory approvals, in the fourth quarter of 2001.
