RockTenn, a Georgia-based manufacturer of paperboard, containerboard and consumer and corrugated packaging, and Smurfit-Stone Container Corporation announced in late January that the companies have approved an agreement under which Smurfit-Stone will become a wholly owned subsidiary of RockTenn.

Smurfit-Stone operates internationally, including the containerboard mill at Hodge, Louisiana.

The acquisition, for a net value of approximately $3.5 billion, including 50% cash and 50% RockTenn stock, is valued at $35 per-share of Smurfit-Stone common stock, and represents a 27% premium to Smurfit-Stone's closing stock price on January 21, 2011. The transaction will create a $9 billion leader in the North American paperboard packaging market, the companies said. RockTenn will maintain its headquarters in Norcross, GA.

Smurfit-Stone is one of the industry's leading integrated containerboard and corrugated packaging producers and one of the world's largest paper recyclers. Smurfit-Stone has manufacturing mill capacity of 7.0 million tons, and when combined, RockTenn will have 9.4 million tons of total production capacity, including 7.5 million tons of mill production in the containerboard market.

RockTenn's Chairman and Chief Executive Officer, James A. Rubright said, RockTenn's acquisition of Smurfit-Stone is another major step in our transformation of RockTenn to be the most respected company in our business. U.S. virgin containerboard is a highly strategic global asset. With this acquisition, RockTenn's fiber input ratio will be 55% virgin and 45% recycled.

The purchase price includes approximately $1.8 billion of cash and the issuance of 30.9 million shares of RockTenn common stock. RockTenn shareholders will own approximately 56% and Smurfit-Stone shareholders will own 44% of the combined company.

In addition to the equity consideration, RockTenn will assume Smurfit-Stone's net debt and pension liabilities. As of December 31, 2010 Smurfit-Stone's net debt was $0.7 billion and its pension liabilities were $1.1 billion ($0.7 billion after-tax). The transaction is expected to close in the second quarter of 2011 and is subject to customary closing conditions, regulatory approvals, as well as approval by both RockTenn and Smurfit-Stone stockholders.

RockTenn has annual sales of $3 billion with 10,400 employees in the United States, Canada, Mexico, Chile and Argentina.

Smurfit-Stone Container Corporation is an integrated containerboard and corrugated packaging producer and one of the world's largest paper recyclers. Smurfit-Stone generated net sales of $6.3 billion in 2010.

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