Multi Packaging Solutions, the company which three years ago bought Chesapeake Services, has now been bought in a $2 billion deal by WestRock.
WestRock is itself the product of consolidation, in this case between MeadWestVaco and RockTenn two years ago, and produces containerboard and corrugated packaging. It has 39,000 employees across 250 locations across the world, but only one in the UK and one in Dublin. MPS focuses on cartons and value added packaging in healthcare, drinks and entertainment sectors. It has 8,800 staff across 59 manufacturing sites, including 18 factories and two offices in the UK. There are a further three plants in Ireland.
The deal extends WestRock’s coverage into fast expanding markets in spirits, beauty, cosmetics and confectionary, consolidating an offering to the brands it works for. And as WestRock converts around 225,000tpa of board, there is an opportunity for internal efficiencies that go beyond administration and finance. WestRock calculates it can supply between 35-45% of this requirement, and will generate savings of $85 million by the end of the 2019 financial year.
The deal was announced the day after WestRock agreed a $1.025 billion cash deal to sell its home, health and beauty business to Silgan Holdings. The division designed and developed closures and dispensing systems across these markets.
The acquisition is subject to approval by MPS shareholders, but the two largest representing 57% of the equity have pledged their support. Founder Mark Shore and president Dennis Kaltman will join WestRock as part of the transaction.
Shore</a says: “Becoming part of WestRock greatly enhances the portfolio of products we can offer our customers and provides additional scale, resources and capabilities.”
WestRock is paying $18 a share for MPS and will assume $837 million of accumulated debt, creating a total payment of $2.28 billion. MPS generated sales of $1.6 billion with $237 millions Ebitda in the year to September 2016.
Steve Voorhees, CEO of WestRock, says: “Through this transaction we will add a leader in the value added packaging sector that strengthens our differentiated product portfolio of paper and packaging solutions. The combination creates opportunities to drive margin expansion and enhanced financial returns through a combination of increased integration and identified synergies.”
It will not be easy. The acquisition of Shorewood Packaging – a company started by Shore’s</a father and where Mark Shore</a was CEO – by International Paper in 2000 did not achieve the long term benefits. It was sold to AGI in 2012.
WestRock has agreed a takeover of Multi Packaging Solutions, the company that had previously merged with Chesapeake to become a carton printer with sales of $1.6 billion. Now it will be part of board producer WestRock.
