MeadWestvaco Corporation MWV and Rock-Tenn Company RKT have set a deadline of Jun 23, 2015, 5 pm ET for RockTenn shareholders to decide the consideration they want to receive following the merger of the two packaging companies into WestRock Company.
The election deadline may be extended if the RockTenn meeting of shareholders is postponed or adjourned. RockTenn and MeadWestvaco will then announce a new date. As disclosed last month, meeting of MeadWestvaco’s stockholders will be held on Wednesday, Jun 24 in Richmond, VA; while the meeting of Rock-Tenn’s shareholders will be held in Atlanta, GA on the same day.
In lieu of their Rock-Tenn shares, shareholders can choose to receive either cash or shares in WestRock or a combination of both. The documents necessary for RockTenn shareholders to make an election for their merger consideration were mailed to them beginning on May 22, 2015.
Prior to the deadline, RockTenn-registered shareholders must deliver a properly completed form of election and letter of transmittal, together with their RockTenn stock certificates, confirmation of book-entry transfer or notice of guaranteed delivery, and a completed Internal Revenue Service (IRS) Form W-9 (or the IRS Form W-8, as applicable) to Computershare Trust Company, N.A. Shareholders who hold their shares through a broker, dealer, commercial bank, trust company or other nominee must make their elections through respective mediums.
At the Jun 24 meeting, shareholders will be asked to consider and vote on proposals to approve the transaction and related proposals. The approval of each company's shareholders is required to complete the merger agreement.
The companies expect the merger to be completed by Jul 1, 2015. Following the merger, WestRock will be the second-largest U.S. packaging company valued at $16 billion close at the heels of International Paper Company IP with a market capitalization of $22.7 billion. WestRock is expected to generate net sales of $15.7 billion and adjusted EBITDA of $2.9 billion. This includes the impact of $300 million in estimated annual synergies, to be achieved over three years.
However, the deal has its inherent risks. Failure to complete the merger could adversely affect MeadWestvaco’s business and its share price. The company will also continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the merger.
Additionally, MeadWestvaco will be subject to business uncertainties and contractual restrictions while the transaction is pending. The combination agreement restricts both the companies from making particular acquisitions and expenditures, entering into certain contracts, and taking other specified actions without the consent of the other party until the merger is completed. These restrictions may prevent MeadWestvaco from pursuing attractive business opportunities that can arise prior to closing of the merger.
MeadWestvaco currently carries a Zacks Rank #3 (Hold).
In May, another major deal took place in the food-packaging industry in which the glass container maker, Owens-Illinois, Inc. OI agreed to buy the food and beverage glass container business of Mexican company, Vitro, for $2.15 billion. The deal will provide Owens-Illinois a competitive edge in the attractive and growing glass segment of the packaging market in Mexico, further solidifying its position as the world's leading glass container producer.
Another notable deal this year is the buyout of Rexam plc by Ball Corporation. If it comes through, it will create the world’s biggest maker of food and beverage cans.
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