STAMFORD, Conn. — Mead Corp. and Westvaco Corp. are merging in a $3 billion deal designed to forge two midsize paper companies into a more formidable global competitor.
The combined company, to be named MeadWestvaco Corp., will have revenue of more than $8 billion in packaging, coated and specialty papers, consumer and office products and specialty chemicals, the companies announced Wednesday.
Top executives expect the combined company will be able to compete more effectively with global forest products industry heavyweights like Georgia-Pacific Corp. and International Paper Co.
"I think it is a good combination," said Anna Torma, first vice president at Merrill Lynch in New York. "I do believe it could act as a catalyst for further consolidation in the industry."
The merger comes just a week after the Swedish business daily Dagens Industri reported that Stora Enso, a Swedish-Finnish forest products group, was in merger talks with U.S. papermaker International Paper Co. But the companies declined to comment on the report and some analysts said the chances of that merger were unlikely because the companies were focused on reducing debt.
Torma said she still does not expect IP to merge with Stora Enso for now as a result of the Mead-Westvaco merger. But she said other consolidations were possible, such as IP acquiring Sappi, a South African company focused on coated papers.
MeadWestvaco will have more than 32,000 employees, with headquarters in Stamford, Conn., where Westvaco is based. The coated papers and consumer and office products business will be located in Dayton, Ohio, where Mead is based.
Mead's chairman, president and chief executive, Jerome F. Tatar, will serve as chairman of the combined company, and John A. Luke Jr., Westvaco's chairman and CEO, will be CEO and president.
The companies expect to cut costs and boost revenues by more than $325 million a year as a result of the combination.
Doug Draper, a spokesman for Mead, said while there will be some job cuts, no decision has yet been made on a specific number.
Under the deal, Mead shareholders will own 50.2 percent of the new company and will receive one share in MeadWestvaco for each Mead share, plus $1.20 per share when the deal is completed. Westvaco shareholders will own 49.8 percent of the new company and will receive 0.97 share for each share held.
At Tuesday's closing prices, the deal values Westvaco shares at about $3 billion.