MeadWestvaco Buys AARDEX Group

MeadWestvaco Corporation (MWV - Analyst Report) has completed the acquisition of AARDEX Group, the leader in measuring patients’ adherence to medications. The financial terms of the deal were undisclosed.

AARDEX Group is the leader in developing, manufacturing and marketing of MEMS (Medication Event Monitoring System). The system helps in measuring, analyzing and facilitating patients’ adherence to prescribed drugs and dosing regimens in clinical trials.

The acquisition was in line with the company’s strategy to fortify its leadership position and gain market share in the growing end markets. The acquisition will open the door for MeadWestvaco to foray into the fields of adherence packaging to establish a wider client base.

The company’s portfolio expanded in the complete range of packaging, data analysis and service solution that help in addressing the habit of non-adherence to medications among patients. MeadWestvaco will include MEMS into its current portfolio of adherence packaging solutions. In addition, AARDEX’s expert employee team will become the employees of MeadWestvaco.

MeadWestvaco has been implementing various policies to strengthen its position in the global packaging market along with combating the challenging market conditions. The company decided to spin-off its Consumer & Office Products segment into a new entity and merge it with ACCO Brands.

The transaction was valued at $860 million. The shareholders of MeadWestvaco received 50.5% shares of ACCO Brands while MeadWestvaco received $433 million in cash, both on a tax-free basis.

Per its strategy, MeadWestvaco had earlier completed the acquisition of Polytop Corporation to further strengthen its position in global packaging. The company now targets at achieving average annual growth of 5%-10% by leveraging its strong packaging platform.

However, the company faces severe challenges from the weak housing and labor markets in the U.S. and financial crisis in Europe. Lower consumer confidence and soft demand in some of the end markets are weighing on its margins.

MeadWestvaco faces competition from companies like International Paper (IP - Analyst Report) and WeyerhaeuserCo. (WY - Analyst Report). Currently, the stock retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on MeadWestvaco.