The Competition Commission of India (CCI) has cleared the proposed merger between US companies MeadWestvaco Corp and Rock-Tenn Company after finding that the deal is not likely to adversely impact competition in the Indian market.
Rock-Tenn is into packaging solutions as well as manufactures container board and paperboard. MeadWestvaco provides corrugated packaging solutions and specialty chemicals for automotive and other industries. Both entities are present in India.
Giving its clearance, fair trade regulator CCI said the "proposed combination is not likely to have an appreciable adverse effect on competition in India".
While Rock-Tenn does not have production facilities or other assets in India, it is involved in sales of merchandising displays and corrugated boxes in the country.
In India, MeadWestvaco is engaged in the business of corrugated packaging for consumer goods, household appliance and pharmaceuticals, among others. It has two subsidiaries - MeadWestvaco India Pvt Ltd and MeadWestvaco India Paperboard Packaging Pvt Ltd.
According to CCI, horizontal overlap exists between MeadWestvaco and Rock-Tenn in manufacture and sale of corrugated packaging in India.
"However, in this regard, it is noted that Rock-Tenn has only marginal sales in India and the combined market share of the parties in the corrugated packaging business is insignificant in India," CCI said in its order dated March 30.
There is no vertical relationship between the two companies in the country, it added.
For the combination, Rock-Tenn last month set up Rome Milan Holdings and the latter incorporated RKT Merger Sub and MWV Merger Sub.
Under the multi-layered deal, RKT Merger Sub would be merged with Rock-Tenn, which would be a subsidiary of Rome Milan Holdings. Then MeadWestvaco would be merged with MeadWestvaco Merger Sub and the latter would be a limited liability company of Rome Milan Holdings.
After the combination, MeadWestvaco shareholders would have a 50.1 per cent stake while those of Rock-Tenn would own 49.9 per cent in Rome Milan Holdings.