WestRock (WRK) Initiates Qtr. Dividend at 37.5c/Share; Approves 40M Common Stock Buyback

WestRock (NYSE: WRK) announced its initial shareholder return strategy as the newly formed company began operations following the completion earlier today of the merger of MeadWestvaco (NYSE: MWV) and RockTenn (NYSE: RKT).

Dividend

WestRock's board of directors has set an initial quarterly dividend rate of $0.375 per share, which is equivalent to an annual rate of $1.50 per share. The annualized rate represents an initial yield of approximately 2.40 percent and a 17 percent increase to the most recent combined dividend rates of MeadWestvaco and RockTenn. The shareholder record date and payment date for the quarterly dividend will be announced over the next several weeks.

The company expects to maintain the $1.50 per share dividend after the previously announced tax-free spin-off of its Specialty Chemicals business, which will increase the effective dividend yield for WestRock shareholders after completion of the spin-off.

Share Repurchase Authorization

WestRock's board of directors has authorized a repurchase program of up to 40.0 million shares of common stock, representing approximately 15 percent of the outstanding common stock of the company as of July 1, 2015. Based on the equity market value of the company on July 1, 2015, this repurchase program equates to approximately $2.5 billion in current stock market value. Shares of common stock may be purchased from time to time in open market or privately negotiated transactions. The timing, manner, price and amount of repurchases will be determined by the company at its discretion based on factors including the market price of the company's common stock, general economic and market conditions, and applicable legal requirements. The repurchase program may be commenced, suspended or discontinued at any time.

WestRock is currently in an earnings blackout period. As such, the company is not permitted to make any repurchases. The company may commence repurchases, if so inclined, two business days after its fiscal third quarter 2015 results conference call, which is scheduled for July 30, 2015.

CEO Statement

"WestRock has a great business platform, strong cash flows and a solid balance sheet. Our dividend and our share repurchase program are key components of WestRock's balanced capital allocation strategy," said Steve Voorhees, chief executive officer of WestRock. "Our balanced capital allocation strategy, anchored by our normalized leverage ratio target of 2.25 to 2.50 times, will allow us to pay an attractive dividend, continue to invest in our business, take advantage of accretive business opportunities, including acquisitions, and return significant capital to our shareholders through share repurchases. The board's action to initiate the dividend and share repurchase program on our first day as a new company speaks to our confidence in our outlook for the long-term profitability of WestRock and our disciplined approach to capital allocation."

Financing

WestRock also closed on a financing package on July 1, 2015 and has more than $3.5 billion in available liquidity and credit commitments to support its capital allocation and shareholder return strategies.

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