Smurfit Westrock – the now-confirmed merger between Smurfit Kappa and WestRock – has entered the New York and London Stock Exchanges, with its sights set on creating a ‘go-to leader’ in the sustainable packaging space. We take stock of its progress and dig deeper into what the combination actually means, both financially and product-wise.

Talks of a potential merger first arose in September 2023, with both companies’ Boards of Directors consenting to the merger and confirming an agreement soon after. With eight Smurfit Kappa Directors and six WestRock Directors set to form the Board of Smurfit WestRock, shareholders were encouraged to voice their agreement regarding the merger.

Subject to shareholder and regulatory approvals, among other customary closing conditions, the combination was expected to be completed in Q2 2024.

Last month, a preliminary vote count was held at WestRock’s Special Meeting of Stockholders, at which point WestRock’s shareholders approved of the proposed merger. Now Smurfit WestRock is going to acquire Smurfit Kappa under a scheme of arrangement in line with the Companies Act 2014 of the Republic of Ireland.

By Bloomberg’s estimate, the deal is worth $11.2 billion; Smurfit Kappa and WestRock expect the merger to reach a value of around $20 billion.

Smurfit Kappa shareholders own around 50.4% of Smurfit WestRock, with the remaining 49.6% belonging to WestRock shareholders. Once the merger has been completed, WestRock common stockholders will apparently receive one share of Smurfit WestRock and $5.00 in cash for each WestRock share they hold.

Smurfit WestRock subsidiary Sun Merger Sub will also merge with WestRock and become a wholly-owned subsidiary of the combined entity.

Upon Smurfit Westrock’s listing on the New York Stock Exchange (NYSE) and its trading activity on the London Stock Exchange, Smurfit Kappa’s shares have been delisted from Euronext Dublin’s official list, as well as the premium segment of the Financial Conduct Authority’s official list. Smurfit WestRock is expected to seek out U.S. equity index inclusion in the near future.

Smurfit Westrock CEO Tony Smurfit believes that the merger has resulted in “a world-leading sustainable packaging player” and “the ‘go-to’ leader and partner of choice in sustainable packaging.” The companies combined efforts are set to “[bring] together a tremendous depth of experience and expertise from both companies.”

Additionally, Smurfit Westrock’s chief financial officer, Ken Bowles, points to the merged company’s “unique geographic footprint” and “unparalleled ability to provide value for our customers”.

The merging companies previously stated that their ‘highly complementary’ portfolios would come together to spearhead the sustainable packaging sector, operating in 42 countries with a ‘significant presence’ across Europe and the Americas.

Under the new deal, it is anticipated that Smurfit WestRock will be incorporated and domiciled in Ireland. Global headquarters will be located in Dublin, while North and South American operations are set to be headquartered in Atlanta, Georgia.

The aforementioned portfolio is set to offer ‘unique product diversity and innovative sustainability capabilities, with breadth and depth across renewable, recyclable and biodegradable packaging solutions’. Both companies operate in the corrugated and paper-based packaging space and apparently share ambitions to achieve sustainability in their product lineup.

Operating efficiency is expected to improve, with increased returns across 500 converting operations and 67 mills, with around 100,000 employees set to unlock ‘broader opportunities’. Its management teams are said to be experienced and offer ‘strong track records of execution and delivery to support global operations’.

Moreover, it is anticipated that both sets of shareholders will gain ‘immediate and long-term’ value creation opportunities.

Smurfit Kappa apparently reported $2.9 billion in revenue in the first quarter of 2024. Within the same time frame, WestRock was said to achieve $4.73 billion in net sales.

Since Smurfit Kappa is a Principal Partner of Wigan Athletic F.C., the football team’s official 2024/25 playing shirts will feature Smurfit Westrock branding.

A market data report from Smithers recently predicted that the corrugated board packaging sector would experience ‘slight’ growth across 2024. Although the COVID-19 pandemic in 2020 disturbed global logistics, impacted demand, and led to high inventories and destocking, value is expected to increase to $231.7 billion (€215,034,977,5000) over the course of this year.

In other news, Suzano recently announced that it had abandoned plans to acquire International Paper after the latter ‘did not engage’ with an offer of over $15 billion. This could mean that International Paper’s previous agreement to acquire DS Smith could still proceed as intended.

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