MeadWestvaco Corp. And Rock-Tenn Co. Merging Will Create A $16 Billion Heavyweight Packaging Company

Rock-Tenn Co. and MeadWestvaco Corp., two major packaging companies, have agreed to merge this 2015. This merger would create a heavyweight company of about $16 billion dollars that will be able to supply the packaging and container needs for almost every product from sodas to appliances.

Although the two companies play a major role in the same industry, they are in different playing fields of the packaging business. Last year, Rock-Tenn Co. was able to earn $10 billion in sales. It is considered as the second largest seller of boxes that is used to contain pizzas, delivery packages from Amazon.com and various internet-based companies, suppliers and merchandisers from North America. Rock-Tenn Co. is only behind International Paper Co. in sales.

MeadWestvaco Corp., on the other hand, is second only to Graphic Packaging Holding Co. in supplying thinner paper cartons that are used for holding ice cream, cereals and beer. MeadWestvaco’s annual revenue is $5.6 billion.

The deal was announced on Monday and through it, an approximately 13 million tons of paper will be produced and will be used for packaging purposes. It will also open up numerous job openings for about 42,000 employees in 30 different countries as well as plants located in Brazil and India.

Rock-Tenn has been known for its acquisitions and in the past decade, it was able to $7 billion worth of acquisitions. In 2011, Rock-Tenn was able to acquire Smurfit-Stone Container which had effectively helped raise its market share to an outstanding 20%. Smurfit-Stone Container is known for its corrugated packaging and the success of its acquisition and the ultra fast consolidation has prompted Rock-Tenn to look for more significant deals.

Unfortunately, the name of the new company has not been made known to the public yet but it will surely be headed by the Chief Executive of Rock-Tenn, Steven Vorhees while the CEO and Chairman for MedWestvaco, John Luke Jr., will become chairman of the new board. The shareholders of both companies have agreed that there will be eight members from Rock-Tenn on the board and six from MeadWestvaco.

The merger of the two major packaging companies will also include operations for the use of plastic.