Smurfit Kappa, a prominent player in the packaging industry, is reportedly engaged in merger discussions with its US counterpart, WestRock. This prospective merger has the potential to create a cardboard box-making powerhouse boasting a market value approaching $19 billion (€17.8 billion). Furthermore, this strategic move would result in Smurfit Kappa's departure from the Dublin stock exchange.
The confirmation of these merger talks came via an official statement by Smurfit Kappa, following an initial report by the Wall Street Journal. An official announcement regarding the merger could be anticipated as early as next week.
The focal point of these negotiations revolves around the shareholders of Atlanta-based WestRock, the second-largest paper packaging company in the United States. It is expected that they will primarily receive shares in the newly formed entity, which would bear the name "Smurfit WestRock." It's noteworthy that this development comes approximately five years after Smurfit Kappa rebuffed a takeover bid from WestRock's larger domestic competitor, International Paper.
Smurfit Kappa has outlined that the combined entity would have its headquarters situated in Dublin, with operational activities in the Americas centered in Atlanta. However, the company intends to withdraw from Euronext Dublin and seek primary listing on the New York Stock Exchange. This change in its UK listing will result in its exclusion from the FTSE 100 index.
A merger between these two entities would yield a packaging industry behemoth with dominant market positions in both the United States and Europe. Combined, Smurfit Kappa and WestRock employ approximately 110,000 individuals, operating as independent companies.
In response to these developments, shares in Smurfit Kappa experienced a 3.8 percent decline in Dublin, resulting in a market capitalization of approximately €9.39 billion. Conversely, WestRock witnessed a more than 5 percent increase in market capitalization, reaching $8.59 billion by the close of European trading.
In advising Smurfit Kappa on these merger talks, Citigroup is reportedly serving as the corporate adviser, while WestRock has enlisted the services of investment banks Evercore and Lazard.
Credit source: https://www.irishtimes.com/business/2023/09/07/smurfit-kappa-nears-multibillion-euro-merger-with-us-packaging-firm/