Smurfit Kappa is planning a merger with WestRock, a move which will make Smurfit WestRock the largest packaging company in the world with sales of $34 billion and 100,000 employees.
There is no guarantee that the two will come together and court approval will be needed, but an announcement made by Smurfit last week suggests that it at least if confident of success. The two companies are “discussing key terms of a potential combination to create Smurfit WestRock.”
The combined entity would have unparalleled reach across 42 countries, 500 converting operations and 67 mills. Despite the number of operations a combined operation would have, there is relatively little overlap between the two.
WestRock is active in both corrugated and folding cartons, a sector from which Smurfit is largely absent. It also has the bulk of its business in North America where Smurfit has 23 operations, most in a Texas/Arkansa/Oklahoma region, from 355 locations worldwide.
In the UK and Ireland WestRock has 19 operations, most from the merger between MeadWestvaco and RockTenn in 2015, and most producing folding cartons. This came from the 2017 acquisition of Multi Packaging Systems which had earlier acquired Chesapeake.
As well as bringing together largely complementary companies, Smurfit says the businesses have a similar outlook on the need for sustainability. The deal will result in $400 million in synergistic savings it says. Even before these the effect there will be Ebitda returns of $5.5 billion says Smurfit.
The deal will catapult Smurfit WestRock above International Paper (sales of $20.5 billion); Amcor (sales of $14.6 billion); Tetrapak (€12.5 billion) and Graphic Packaging International at an expected $10 billion. DS Smith, which has most closely matched Smurfit reported full year sales of £8.2 billion for its 2022/23 financial year.
Terms of the proposed merger are not disclosed. WestRock shareholders would receive the majority of their consideration via shares of the combined group. The shares would be listed on the New York Stock Exchange with a corporate headquarters in Dublin. Definitive terms will be explained in a future statement the company states.
