| NEW YORK
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
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
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
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.