Rock-Tenn and MeadWestvaco (MWV) have announced a merger agreement to form a $16bn combined consumer and corrugated packaging company.

Under terms of the definitive combination agreement, MWV will own a 50.1% stake in the combined company, while RockTenn will own the remaining 49.9% stake.

MWV chairman and CEO John A Luke, Jr said: "We are creating the leading global provider of consumer and corrugated packaging solutions and generating significant value for both companies’ shareholders.

"We are creating the leading global provider of consumer and corrugated packaging solutions and generating significant value for both companies’ shareholders."

"This transaction is a logical step that is borne of our strategic progress and financial success, and it offers MWV shareholders both immediate value and the opportunity to participate in significant upside as the new company generates substantial growth from its market-focused global strategy."

The proposed company is expected to generate combined net sales of $15.7bn and adjusted EBITDA of $2.9bn, including the impact of $300m in estimated annual synergies to be achieved over three years.

RockTenn CEO Steven C Voorhees said: "This transaction brings together two highly complementary organisations to create a new, more powerful company with leadership positions in the global consumer and corrugated packaging markets.

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"This is a terrific opportunity for shareholders, employees and customers of both companies, all of whom stand to benefit enormously from the combination.

"Importantly, our two companies are also an exceptional cultural fit, sharing a commitment to exceeding customer expectations and a focus on developing innovative packaging solutions. Planning for the integration of these two companies has already started and we expect to expeditiously realise the full value of cost synergies we have identified."

The deal is expected to be closed in the second calendar quarter of this year, after receiving shareholders’ approval from both MWV and RockTenn.