MeadWestvaco gets closer to Merger - Analyst Blog
April 24 2012 - 7:00AM
Zacks
MeadWestvaco
Corporation (MWV) moves closer to the completion of its
merger with ACCO Brands Corporation (ABD).
Shareholders of ACCO Brands have given a go-ahead for the issue of
common stock required for the completion of the merger.
The new share issues will be traded
from April 24, 2012 in the New York Stock Exchange (NYSE) with the
ticker symbol of “ACCO wi”. Both the companies are hopeful about
the completion of the merger before the market opens on May 1,
2012. The merger, however, will be conditional on several
stipulations. One such prerequisite is that from that day
onwards, ACCO Brands will change its ticker symbol from ABD to
ACCO.
It was in November 2011 that
MeadWestvaco announced its decision to spin-off its Consumer and
Office Products Business into a new entity and merge it with ACCO
Brands. Upon completion of the merger, the shareholders of
MeadWestvaco will receive 50.5% shares of ACCO Brands while
MeadWestvaco will receive $460 million in cash, both on a tax-free
basis. The transaction was valued at $860 million in total.
The company will be distributing
the shares of the Consumer and Office Products Business among its
shareholders in stock dividends. The shareholders of MeadWestvaco
will get nearly 0.33 shares of ACCO Brands for owning each share of
MeadWestvaco.
Global crisis emanating from weak
housing and labor markets in U.S. and the prevalent financial
crisis in Europe resulted in lower consumer confidence coupled with
tighter inventory management and softer demand in some of the
markets of the company. Consequently, MeadWestvaco decided to spin
off the Consumer and Office Products Business.
The company plans to focus more on
Packaging Resources Segment which is its highest revenue generating
segment. MeadWestvaco developed several innovative packaging
solutions and expects to generate more than $1 million of
additional revenues over the next three to five years.
MeadWestvaco competes with many
large, well-established companies like Bemis Company,
Inc. (BMS) and Sealed Air Corporation
(SEE) as well as some lower cost manufacturers. The strong
competition could result in pricing and demand pressures; adversely
affecting the company’s operating results.
Currently, we have a Neutral
recommendation on MeadWestvaco for the long-term. The stock retains
a short-term Zacks #3 (Hold) Rank.
ACCO BRANDS CP (ABD): Free Stock Analysis Report
BEMIS (BMS): Free Stock Analysis Report
MEADWESTVACO CP (MWV): Free Stock Analysis Report
SEALED AIR CORP (SEE): Free Stock Analysis Report
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