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Meadwestvaco surges after Peltz buys 16M shares

NEW YORK (AP) -- Shares of Meadwestvaco Corp. jumped Friday after activist investor Nelson Peltz disclosed that he has a stake in the packing company.

THE SPARK: Peltz, of Trian Fund Management, disclosed that he bought 1.6 million shares of Meadwestvaco. That's about 0.9 percent of the company's outstanding shares.

The biggest shareholders in Meadwestvaco include Capital Research & Management, which owns a 12.3-percent stake, BlackRock Inc. and T. Rowe Price Associates, which own 6.2-percent and 6.1-percent of the company's shares, respectively.

THE BIG PICTURE: Peltz and Trian are known for shaking up other companies. In 2012 Peltz took a 7.3-percent stake in industrial company Ingersoll-Rand and later joined its board. Ingersoll-Rand then reviewed a series of strategic options, including some that were presented by Trian, and decided to spin off its security technology business, buy back $2 billion in stock, and raise its quarterly dividend.

Meadwestvaco is based in Richmond, Va., and its businesses include specialty chemicals, inks and oilfield drilling, land, home health and beauty packaging, and food and beverage packaging. It says it expects its income, sales and cash flow to improve in 2013, but it also said income in the first quarter of will be lower than they were a year ago. In the fourth quarter it reported gains in its specialty chemicals unit, but said its earnings were hurt by a decline in economic activity at the end of 2012.

In 2012 Meadwestvaco sold its consumer and office products business, which makes products like Mead, Five Star, and Trapper Keeper, to ACCO Brands Corp. for $860 million.

SHARE ACTION: Shares of Meadwestvaco rose $3.96, or 12.5 percent, to $35.64 in afternoon trading. Earlier the stock peaked at $35.80, an all-time high.