RockTenn (NYSE:RKT), Smurfit-Stone (NYSE:SSCC) Agree to Takeover Deal

RockTenn (NYSE:RKT) has announced it has come to an agreement with Smurfit-Stone (NYSE:SSCC) to take them over in a cash and stock deal valued at $3.5 billion.

The offer is a 27 percent premium over the price of $27.52 Smurfit-Stone closed at on Friday.

Terms of the offer are 50 percent cash, 50 percent stock, whereby shareholders of Smurfit-Stone will receive 0.30605 shares of RockTenn for each share they own. RockTenn will also assume close to $700 million in Smurfit-Stone debt, as well as $1.1 billion in pension liabilities.

RockTenn shareholders will own approximately 56 percent of the new entity once the deal is closed. After the deal annual sales from the two companies should reach about $9 billion, according to the two companies.

Chairman and Chief Executive Officer of RockTenn, 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 with a laser focus on exceeding our customers’ expectations and creating long term shareholder value."

Expectations are the deal will close sometime in the second quarter of 2011.