MeadWestvaco Selling Paper Assets

MeadWestvaco Corp. has reached an 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 investment firm.

After closing the sale, 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 about 24,000 employees. The company will focus on expanding its packaging business by penetrating 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 expected to be complete by the second quarter of the year.

Under the terms of the agreement, the new company will acquire MeadWestvaco's Papers business, which consists of mills in Chillicothe, Ohio; Escanaba, Mich.; Luke, Md.; Rumford, Maine; and Wickliffe, Ky. The mills have a combined annual capacity of about 2.05 million tons of coated paper, 290,000 tons of carbonless paper and 110,000 tons of uncoated paper.

The sale also includes approximately 900,000 acres of forestlands in Illinois, Kentucky, Michigan, Missouri, Ohio and Tennessee. After the sale, MeadWestvaco will own about 1.2 million acres of forestland.

Peter Vogel, Jr., current president of MeadWestvaco's Papers Group, will become CEO of the new company.