Dayton's Mead Corp. and Westvaco Corp. are merging in a $3 billion deal designed to forge two midsize paper companies into a more formidable global competitor.

        The merger will remove Mead's headquarters from Dayton, where the company was founded in 1882 by Daniel Mead. But the deal won't cut the merged company's Dayton workforce or its commitment to the community, a Mead spokeswoman said.

        With about $8 billion in sales a year, the combined company will become the second-largest maker of coated paper, the glossy paper used in magazines and brochures. International Paper Co., the bigger forest-products company and supplier of coated paper, had sales of $28.2 billion in 2000.

        The new company, MeadWestvaco Corp., plans to cut costs by about $325 million within two years by eliminating an unspecified number of jobs and plants. The forest-products industry is consolidating to reduce capacity as the slow economy hurts sales of paper used for packaging, newspapers, advertisements and office products.

        It's uncertain where those cuts will happen, spokeswoman Amber Garwood said. All facilities — including one in Chillicothe that employs about 2,200 people and makes coated and carbonless papers — will be subject to a strategic review.

        MeadWestvaco will have more than 32,000 employees, with headquarters in Stamford, Conn., where Westvaco is based.

        Phil Parker, president and CEO of the Dayton Area Chamber of Commerce, said NCR Corp. will be the last major firm headquartered in Dayton after Mead leaves.

        “We never like to see a headquarters office move,” Mr. Parker said. “There's a lot of prestige to having a large headquarters in town.”

        Still, he is encouraged that MeadWestvaco's presence in Dayton will remain strong. The coated papers and consumer and office products business will stay, along with a “significant” portion of its 800-person corporate staff, Ms. Garwood said.

        Mead's chairman, president and chief executive, Jerome F. Tatar, will be chairman of the combined company, and John A. Luke Jr., Westvaco's chairman and CEO, will be CEO and president.

        Despite needing to spend time in Connecticut, Mr. Tatar will likely remain active in the Dayton community, Ms. Garwood said. Identified as one of Dayton's most influential citizens, Mr. Tatar is chairman of the Miami Valley Reads Project, and on

        the boards of Sinclair Community College, and the board of theOhio Foundation of Independent Colleges.

        Mead's corporate involvement — such as supporting the Dayton Dragons minor league baseball team, the Dayton Art Institute, the Boonshoft Museum of Discovery, and local colleges — also will not wane, Ms. Garwood said.

        “We are very committed to the communities where we operate, and that will remain a core value to MeadWestvaco,” she said.

        Mead shareholders will own 50.2 percent of the new company and will receive one share in MeadWestvaco for each Mead share, plus $1.20 per share when the deal is completed. Westvaco shareholders will own 49.8 percent and will receive 0.97 share for each share held.

        At Tuesday's closing prices, the deal values Westvaco shares at about $3 billion.

        By Wednesday's close, Mead stock had gained $1.99, or 6.7 percent, to $32.17. Shares of Westvaco rose $2.09, or 7.6 percent, to $29.75.

        The deal has been approved by the boards of both companies and is subject to shareholder and regulatory approval. The companies hope to complete the deal by the end of the year.

        — Bloomberg News contributed

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