NEW YORK Oct 19 MeadWestvaco Corp is buying Indian packaging producer Ruby Macons Ltd, a deal that will more than triple its sales in one of the world's fastest-growing economies.
Terms were not disclosed, though the deal is a "modestly sized transaction," MeadWestvaco Chief Executive John Luke said in an interview.
Ruby Macons has annual sales of about $80 million with "double-digit" operating margins. MeadWestvaco's annual sales in India are roughly $30 million.
The deal will immediately add to MeadWestvaco's earnings when it closes in December, Luke said.
"What we really became intrigued by in India was the unfilled need for higher-quality corrugated packaging," he said. "This will give us a platform in a market that we know increasingly well."
India's packaging industry is the eleventh-largest in the world and is expected to grow at least 18 percent annually for the next few years and be worth $16.5 billion in 2015, according to the Packaging Industry Association of India, an industry trade group.
MeadWestvaco hopes to grab a chunk of that growth by supplying corrugated packaging that farmers and retailers can use to ship produce and other goods that can spoil quickly when transported in wooden crates.
It's a strategy that has worked well for MeadWestvaco in Brazil, where the company's MWV Rigesa unit spent nearly $500 million in 2010 to expand corrugated packaging production.
Last year International Paper Co became the first foreign paper and packaging producer to expand into India with its $388 million buyout of Andhra Pradesh Paper Mills Ltd.
Ruby Macons produces roughly 150,000 tons of paperboard for corrugated packaging each year at three machines in Vapi, India, a city roughly 100 miles (165 km) north of Mumbai on the country's western coast.
MeadWestvaco plans to increase that capacity by adding a fourth paper machine, Luke said. The company currently operates a box plant in Pune, India.
MeadWestvaco plans to retain Ruby Macons' roughly 450 employees, including current President Ashraf Nathani.
The Ruby Macons name will eventually go away, replaced by MeadWestvaco branding, Luke said.
Shares of Richmond, Virginia-based MeadWestvaco have gained about 3 percent so far this year, closing Thursday at $30.89.