MeadWestvaco sells paper business for $2.3 billion
MeadWestvaco, the US packaging, paper and office products producer, has announced 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 buyout firm based in New York.
MeadWestvaco expects the transaction to result in after-tax net proceeds of approximately $2.1 billion at closing, which it will use to improve its overall capital structure. The company expects to use approximately $900 million to $1.1 billion of the proceeds to pay down debt and between $500 million and $700 million to return value to shareholders through stock repurchases. At the completion of the capital restructuring, the company expects its debt to capital ratio to be 40% or better. The remaining cash will be available either for strategic growth opportunities or to further pay down debt and return value to shareholders.
John Luke, chairman and CEO of MeadWestvaco, said the deal would enable the company to concentrate more of its 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,? he said.