Packing firm MeadWestvaco's shares jump on merger

Shares of packing manufacturer MeadWestvaco (MWV) jumped more than 13% in pre-market trading on news that it would merge with competitor Rock-Tenn (RKT) to create a $16 billion packing giant.

The two publicly traded packing companies said Monday that they have entered into an agreement to join forces in a deal that will give MWV shareholders a 50.1% stake of the new entity.

MWV stockholders will receive 0.78 shares of the new company, which hasn't yet been named, for each share of MWV they currently hold.

RockTenn shareholders will have the option to receive either one share of the new company or cash in an amount equal to the volume weighted average price of RockTenn common stock during a five-day period ending three trading days prior to closing of the deal.

RockTenn CEO Steven will serve as chief executive officer and president of the new company. John Luke Jr., chairman and chief executive officer of MWV, will become non-executive chairman of the new company's board.

Shares of Richmond, Va.-based MWV shares jumped more than 13% in early trading to $51.04 a share. Shares of Norcross, Ga.-based RockTenn rose 7.1% to $67.45 a share.