Smurfit Kappa Discussing $20bn Merger with US Rival WestRock

Smurfit Kappa Discussing $20bn Merger with US Rival WestRock

Paper and packaging company Smurfit Kappa has officially acknowledged that it is engaged in talks with American competitor WestRock regarding a potential merger with a value of $20 billion.

Smurfit Kappa Discussing $20bn Merger with US Rival WestRock - Figure 1

Smurfit Kappa announced that the merger is likely to result in the establishment of a fresh parent company, Smurfit WestRock. The process will be carried out through an Irish arrangement plan involving Smurfit and the merging of a subsidiary with WestRock.

Smurfit WestRock is set to be included in the New York Stock Exchange, while being legally registered and based in Ireland. Its main office is situated in Dublin, acting as the central hub for its worldwide operations, while its administrative centers for the North and South American regions can be found in Atlanta.

Smurfit is planning to remove itself from Euronext Dublin, the stock market of Ireland, and its superior registration on the London Stock Exchange would be terminated. It is anticipated that the merged company will then be listed under the standard listing category of the LSE.

If a merger occurs, WestRock shareholders will primarily receive shares in the merged company as compensation.

An agreement between the biggest and runner-up paper and packaging corporations would establish a bigger conglomerate with business in 42 nations and potentially a workforce of 100,000 individuals.

The businesses indicated a total income of $39.5 billion and EBITDA of $5.5 billion during the one-year period until June's conclusion. Following the merger, the newly formed conglomerate aims to achieve cost savings exceeding $400 million in the first year, bearing in mind the anticipated one-time expense of $235 million.

According to a declaration made by Smurfit, the boards of both companies are of the opinion that the merging of their businesses would result in the establishment of a preeminent packaging ally on a worldwide scale. Furthermore, they believe that their portfolios, which complement one another exceptionally well, would give rise to a dominant force in sustainable packaging at a global level.

They also anticipate enhanced operational effectiveness and higher profits across over 500 transforming operations and 67 factories, as well as immediate and long-lasting potential for value generation for both groups of investors.

The parties involved are currently in ongoing discussions and are actively examining each other's information, with the final teams and terms of the transaction yet to be determined.

A merger would only happen if shareholders agree and if regulators give it their approval.

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