MeadWestvaco Agrees to Sell Papers Assets for $2.3 Billion
Proceeds to Be Used to Improve Capital Structure
Company to Focus on Profitable Growth Opportunities in Global Packaging
Stamford, Conn. -- MeadWestvaco Corp. (NYSE: MWV) today announced that it has reached a definitive agreement to sell its Papers business and associated assets for $2.3 billion to a new company controlled by Cerberus Capital Management L.P., a private, New York-based investment firm.
"This transaction marks an important strategic step for MeadWestvaco," says John A. Luke Jr., chairman and chief executive officer. "It makes us a more focused company, able to deliver stronger, more consistent financial returns. Immediately, the sale allows us to reduce the company's debt, return value to shareholders and position the company for profitable growth. It also enables us to concentrate more of our resources on capturing growth opportunities in the global packaging markets.
"This sale monetizes the value of our efforts to create the leading Coated Papers franchise in North America," Mr. Luke continued. "Over the last several years, we have reduced costs and gained market share in a challenging economic environment, and this sale creates a new Papers business that is well positioned to compete as a stand-alone company."
After the closing, MeadWestvaco will have more than $6 billion in annual revenues, with about three-quarters coming from the packaging business and about one-third coming from international sources, and approximately 24,000 employees. The company will focus on expanding its higher margin packaging business geographically by leveraging its strong positions in North America and Europe to penetrate growth markets in Asia, Eastern Europe and Latin America. Additionally, the company will continue to benefit from strong market positions in Consumer and Office Products, Specialty Chemicals and Specialty Papers.
The sale is subject to customary closing conditions, including regulatory approvals and purchaser's financing, and is expected to be completed in the second quarter of 2005.