MeadWestvaco to Acquire Spray Plast - Analyst Blog

Paper and plastics maker MeadWestvaco Corporation (MWV) entered into an agreement to acquire Spray Plast SpA in a drive to expand its European footprint in the Home & Garden business. The acquisition is expected to close by the end of the fourth quarter of this year.

Based in Italy, Spray Plast is a producer of all-plastic trigger sprayers and dispenser pumps, which are widely used in the consumer and professional markets.

MeadWestvaco's Home & Garden business is faring well in the North American market. The company was eyeing to expand its Home & Garden presence in Europe as well as in other emerging markets. We believe this acquisition has provided an appropriate opportunity for the company in this space.

The all-plastic product portfolio of Spray Plast is widely popular in the household and industrial cleaning, automotive, agriculture and veterinary markets in Europe. MeadWestvaco will leverage the expertise of Spray Plast to cater to the increasing demand for high performing and environment-friendly products.

The Home and Garden business is part of MeadWestvaco's Consumer Solution segment. This segment experienced a year-over-year increase in volume during third-quarter 2010, driven by continued growth in home and garden and in personal care dispensing solutions. We expect the addition of Spray Plast to the portfolio will be accretive to revenues going forward.

MeadWestvaco continues to enjoy a strong cash balance, with cash and cash equivalents, as of September 30, 2010, of $774 million. The third quarter 2010 operating earnings of MeadWestvaco Corporation were 63 cents per share versus 46 cents recorded in the year-ago quarter.

The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are 40 cents per share, $1.48 per share and $1.77 per share, respectively.

MeadWestvaco Corporation currently retains a Zacks #3 Rank (short-term Hold rating). We provide a long-term Neutral rating on the stock.

Based in Richmond, Virginia, MeadWestvaco Corporation is a global producer of packaging & consumer solutions, consumer & office products, and specialty chemicals. The company also delivers higher-value paper and plastic-based packaging in the food and beverage, media and entertainment, personal care, cosmetic and healthcare markets.