MWV to Spin Off Consumer & Office Products Business and Merge it with ACCO Brands
Nov. 17, 2011 - MeadWestvaco today announced that the company will spin off its Consumer & Office Products business and has signed a definitive agreement to merge the business into ACCO Brands Corporation, one of the world’s largest office supply manufacturers. The tax-efficient transaction is valued at approximately $860 million to MWV and its shareholders on a pre-synergy basis.
MWV Consumer & Office Products is a leading manufacturer and marketer of school supplies, office products, and planning and organizing tools — including the Mead®, Five Star®, At-A-Glance® and Tilibra® brands. The business has significant operations in the United States, Canada and Brazil. With the addition of this business, ACCO Brands will add to its existing portfolio of top-brands — creating a global school and office products leader.
ACCO Brands also will be able to expand its global footprint, including to the attractive market in Brazil, and create additional value through $30 million of estimated annual cost synergies.
The transaction will enable MWV to sharpen its focus on profitable growth opportunities in large and growing global packaging markets, including food, beverage, healthcare, personal care, tobacco and home and garden.
"This is a transaction that will strengthen the market leadership positions of MWV and ACCO, and creates substantial value for both companies’ shareholders,” said John A. Luke, Jr., chairman and chief executive officer.
“With our Consumer & Office Products business, ACCO will have a stronger presence in the global marketplace for branded school and office products. And, at the same time, we are taking a significant step in transforming MWV’s business to focus on and grow in our targeted global packaging markets.”
Luke continued, “The brands associated with our Consumer & Office Products business are world-renowned, and the management team and employees are exceptional. MWV’s shareholders will gain from the combination with ACCO’s leading positions in office supplies, and will benefit from our continued investment in profitable growth opportunities in our packaging markets.”
The transaction has several benefits for MWV and its shareholders:
- Improves MWV’s overall growth profile and focus on packaging;
- Provides resources to continue to invest in MWV’s core businesses;
- Optimizes value for MWV shareholders through a tax-efficient Reverse Morris Trust structure; and
- Creates a larger and stronger ACCO Brands in which MWV shareholders will have majority ownership.
MWV expects the separation to occur through a “spin-merge” transaction in which the MWV Consumer & Office Products operations will be spun off in a new entity and then that entity will be immediately merged into ACCO Brands. At closing, MWV shareholders will receive 50.5 percent of the shares of ACCO Brands stock and MWV will receive $460 million of cash. In total, this transaction represents an aggregate value of approximately $860 million (pre-synergies) to MWV and its shareholders (based on ACCO Brands’ closing stock price of $6.96 on November 16, 2011). MWV shareholders will receive approximately one share of ACCO Brands for every three shares of MWV held as of the record date.
MWV intends to maintain its current regular quarterly dividend rate of $0.25 per common share.
The transaction is expected to be completed in the first half of 2012.
ACCO Brands has obtained committed financing to effect the transaction. The transaction is subject to approval by ACCO Brands’ shareholders and the satisfaction of customary closing conditions and regulatory approvals, including a favorable ruling from the U.S. Internal Revenue Service. The combined business will be managed by ACCO Brands’ executive team and board of directors. MWV will select two directors to join ACCO Brands’ board at the closing of the transaction. ACCO Brands’ headquarters will remain in Lincolnshire, Illinois.
SOURCE: MeadWestvaco Corp.