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Mead, Westvaco merge
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August 29, 2001: 2:53 p.m. ET
Paper companies combine in a 'merger of equals' valued at $3 billion
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NEW YORK (CNNfn) - Mead Corp. and Westvaco Corp. agreed Wednesday to merge in a $3 billion stock swap, adding to the ongoing consolidation in a forest-products industry beset with excess inventory from weakening demand and falling prices.
Mead is best known for its school supplies, particularly notebooks, while Westvaco, known for packaging, also produces specialty chemicals.
The new company is to be named MeadWestvaco Corp., with Mead shareholders owning a 50.2 percent stake in the combined company, and Westvaco shareholders 49.8 percent.
Jerry Tatar, Mead's chairman, president and CEO, is to serve as chairman of the combined company, and John Luke, chairman and CEO of Westvaco, will be CEO and president.
"This is a strategically and financially compelling merger of equals that creates a stronger company, well-positioned to compete in a global industry," Tatar and Luke said.
Under the terms of the transaction approved by the boards of both companies, Mead shareholders will receive one share of MeadWestvaco stock for each share of Mead stock, and Westvaco shareholders will receive 0.97 share of the new company for each Westvaco share held.
Mead shareholders also will receive a special payment of $1.20 per share on completion of the deal.
The combined company will generate revenue of about $8 billion from four core areas – packaging, specialty papers, consumer and office products, and specialty chemicals – with a combined market capitalization in the neighborhood of $6 billion.
Mead (MEA: up $2.06 to $32.24, Research, Estimates) also has $1.6 billion of debt and Westvaco (W: up $2.21 to $29.87, Research, Estimates) $2.8 billion of debt, according to a Wall Street Journal report.
The transaction, which is subject to approval of shareholders and regulators, is expected to be completed in the fourth quarter of 2001. 
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Westvaco
Mead
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