Packaging company MeadWestvaco Corp. is selling its European-based tobacco folding carton business to Swedish company AR Packaging Group AB.
Boasting an annual revenue of about $190 million, Richmond, Virginia-based MeadWestvaco makes packaging for tobacco, food and beverage, chocolate and consumer apparel in 30 countries including Canada, U.S., Austria, Poland and Russia.
The cash-and-stock transaction will give shareholders of Richmond, Virginia-based MeadWestvaco 50.1 percent of the new company and investors in Rock-Tenn will hold the rest, the companies said Monday in a joint statement.
The deal, the largest in the paper industry in a decade, comes seven months after activist investor Starboard Value LP said it took a stake in MeadWestvaco. Starboard criticized the company for what it described as a conglomerate structure and urged it to find ways to improve its performance. MeadWestvaco outlined plans earlier this month to spin off its specialty-chemical unit, a transaction that will still proceed.
The combination of Rock-Tenn and MeadWestvaco is forecast to cut $300 million of costs annually. The new company will have 42,000 employees in 30 countries across the Americas, Europe and Asia.