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.
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