Robbins Arroyo LLP: Acquisition of MeadWestvaco Corporation (MWV) by Rock-Tenn Company (RKT) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP are investigating the proposed acquisition of MeadWestvaco Corp (NYSE: MWV) by Rock-Tenn (NYSE: RKT). On January 26, 2015, the two companies announced the signing of a definitive combination agreement pursuant to which the companies will combine to create a new company to be named at a later date. MeadWestvaco shareholders will receive 0.78 shares of the new company stock for each MeadWestvaco share they own, which is the equivalent of $49.13.
Is the Proposed Acquisition Best for MeadWestvaco and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at MeadWestvaco is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $49.13 merger consideration represents a premium of only 8.7% based on MeadWestvaco’s closing price on December 26, 2014. This premium is significantly below the average one-month premium of nearly 29.15% for comparable transactions within the past five years. Further, the $49.13 merger consideration is significantly below the target price of $60.00 set by an analyst at APB Financial Group on January 23, 2015.
On January 26, 2015, MeadWestvaco released its earnings results for its fourth quarter 2014, reporting strong quarterly earnings. For the quarter, the company reported sales from continuing operations of 2014 of $1.37 billion compared to $1.31 billion in the fourth quarter of 2013, an increase of 4.5%. In addition, MeadWestvaco reported income from continuing operations attributable to the company excluding special items of $78 million or $0.46 per share in the fourth quarter, compared to $51 million or $0.29 per share in the fourth quarter of 2013, a 53% increase. Further, MeadWestvaco has beat consensus analyst estimates for adjusted EPS, adjusted net income, and sales in three out of its last four quarters.
In light of these facts, Robbins Arroyo LLP is examining MeadWestvaco board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
MeadWestvaco shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information. MeadWestvaco shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.