Smurfit, WestRock (Cont’d from Page 1)
savings of more than $400 million on an annual run-rate basis at the end of the first year following the completion of the deal, said Smurfit. The tie-up would require one-off cash costs of ap- proximately $235 million. Smurfit benefited from a boom in demand for packaging goods and e-commerce during COVID-19 lockdowns, but suffered a setback when economies reopened and producers started cutting back pack- aging stocks. Last month it reported a fall in first-half core prof- it as it struggled to offset a year-on-year decline in volumes. WestRock beat Wall Street expectations for third-quarter profit and said it remained focused on streamlining its portfolio and further reducing costs. The merger would take effect through an Irish scheme of arrangement involving Smurfit Kappa and a merger of a subsidiary with WestRock, Smurf- it said. Smurfit would de-list from Euronext Dublin and cancel its premium listing on the London Stock Ex- change under the deal, the statement said. Its North and South American operations would be head- quartered in Atlanta, Georgia.
Any deal would be subject to shareholder approv- al, due diligence and regulatory approval. WestRock shareholders would receive shares in the combined group, Smurfit Kappa said. Smurfit, which operates in 22 European countries and 13 in South, Central and North America, is Eu- rope’s largest paper and packaging producer. We- stRock is the second largest packaging company in the United States. Monster Merger At current market prices, the combined market capital of the two firms would be around $19 bil- lion. They had combined revenue of $34 billion in the 12 months to the end of June. Research analysts at Credit Suisse said the pro- posed combination had significant strategic and operational merits and strengthens the company’s Americas presence, especially in faster-growing Central America. The merger would be “a good cultural fit” with a strong focus on an innovation-driven expansion of the group’s sustainable packaging business, they said in a research note. The combined entity, which would have approx- imately 100,000 employees, could log pre-tax cost
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Flexo Market News September 11, 2023 3
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