MeadWeestvaco and Rock-Tenn Agree to Merge, Global Markets Edge Up

Nichole Harper
26 Jan, 2015
New York City

Rock-Tenn Corp agreed to merge with the rival packaging company MeadWestvaco Corp and create the second-largest paper and packaging company. Stocks on Wall Street traded sideways and in Europe investors took the latest Greek election results in strides.

[R]12:35 PM New York – Rock-Tenn Corp agreed to merge with the rival packaging company MeadWestvaco Corp and create the second-largest paper and packaging company. Stocks on Wall Street traded sideways and in Europe investors took the latest Greek election results in strides.[/R]

Stocks on Wall Street were little changed after market indexes advanced more than 1.5% last week and New York City prepares for a blizzard that may dump as much as two feet of snow.

Investors were cautious in slow trading and looked at Europe after Greece voted for a new coalition government that promised to unwind austerity measures put in place in the last five years.

On Merger Monday, MeadWestvaco Corp soared 17% after agreeing to be acquired by the U.S. rival Rock-Tenn Co for $9.2 billion and create the second-largest packaging company.

Under the terms of merger proposal, MeadWestvaco shareholders will control 50.1% of the new company and Rock-Tenn holders will own 49.9%.

On Wall Street trading, Tollbooth Strategy Index slid 0.08% or 8.12 to 10,145.94.

S&P 500 index fell 1.78 or 0.09% to 2,049.88 and the Nasdaq Composite Index rose 6.77 or 0.1% to 4,764.67.

U.S. Movers

MeadWestvaco Corp ((MWV)), the packaging company announced net sales in the fourth-quarter ending in December jumped 4.6% to $1.37 billion from a year ago period.

Net income in the quarter tumbled 92.2% to $53 million or 31 cents a diluted share compared to $677 million or $3.77 from the same quarter last year.

Separately, the company said preliminary net sales in the first-quarter ending in December of about $1.07 billion and adjusted operating earnings between $126 million and $128 million.

Rock-Tenn Company ((RKT)) jumped 2.4% or $1.51 to $64.50 after the packaging company and MeadWestvaco Corporation agreed to merge. The new company will have combined net sales of $15.7 billion.

The packaging company reported net sales in the first-quarter ending in December soared 6.4% to $2.51 billion from a year ago period.

Net income in the quarter climbed 14% to $125.1 million or 88 cents a diluted share compared to $109.7 million or 75 cents from the same quarter last year.

The company estimate net sales of about $15.7 billion and adjusted EBITDA of $2.9 billion.

European Markets

Financial markets across Europe opened lower but by late afternoon managed to recover after investors digested latest Greek election results.

Greek parliamentary elections delivered results in line with expectations and opposition Syriza party won 149 of 300 seats.

The anti-austerity party leader Alexis Tsipras formed a coalition government with the right-wing party Independent Greeks.

The coalition government is expected to take tough stance against international lenders and demand revisions to debt and unwind several austerity measures imposed by the International Monetary Fund, European Union and European Central Bank.

In London trading, FTSE 100 index fell 0.5% or 32.46 to 6,800.37 and in Frankfurt the DAX index increased 0.6% or 60.15 to 10,709.73.

In Paris, CAC 40 index edged up 0.06% or 3 to 4,643.69.

Delhaize Group SA climbed 5.9% to €72.98 after the Belgium-based food retailer reported group revenues in the fourth-quarter ending in December soared 6.3% to €5.8 billion in the U.S. and comparable store sales jumped to 3.6% while domestic comparable store sales declined 6.9% and 2.2% in Southeastern Europe.

The company said revenues in the quarter from the U.S. increased 12.1% to €3.7 billion or $4.7 billion and revenues in Belgium plunged 6% to €1.3 billion and revenues from Southeastern Europe jumped 2.8% to €832 million.

The retailer added group underlying operating profit to be about €764 million.

Asian Markets

Stocks traded sideways and Japan’s export rose more than estimated in December and surged to a record high six year.

Exports in Japan soared 12.9% and surged to a record high in six years trimming annual trade deficit to 12.78 trillion yen, surpassing 11.5 trillion yen in 2013. Imports increased 1.9% in the month.

Trade balance turned negative in 2011 and has expanded for four years in a row.

Japan’s trade deficit in December declined more than expected to 660.7 billion yen compared to 893.5 billion yen in November, the Ministry of Finance said today.

2014 trade deficit widened to 12.78 trillion, fourth-consecutive annual deficit since the triple disaster that destroyed nuclear power plants at Fukushima and a record high since 1979. Trade deficit in 2013 was 11.5 trillion yen.

Exports climbed more than forecast in December to 12.9%, the highest level in six years following a 4.9% increase in the previous month.

Imports in the month rebounded 1.9% after falling 1.6% in November.

The Nikkei 225 Stock Average fell 43.23 or 0.2% to 17,468.52 and the broader Topix index slid 1.14 to 1,402.08.

The yen weakened against the dollar after the release of trade deficit data but managed to recover to close at 117.65 against one dollar.

Financial markets in India were closed to observe Republic Day and markets in Australia were also closed.