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Two of the world’s largest packaging companies – US-based WestRock and Ireland’s Smurfit Kappa – are in advanced merger talks to create a global powerhouse valued at nearly $20 billion.
The combined company, which will be called Smurfit WestRock, will have its global headquarters in Dublin and its North and South American operations in Atlanta, Georgia, the Irish company said in a statement.
It will list on the New York Stock Exchange and cancel its premium listing in London and Euronext Dublin, making Smurfit, Europe’s largest packaging company, the latest major company to exit London for a US listing.
CRH, the world’s largest building materials group and another Irish corporate giant, will transfer its listing from London to the United States later this month.
The two packaging companies have a combined market value of about $18.7 billion, according to Financial Times calculations based on Bloomberg data, and the proposed tie-up would create a global “preferred packaging partner,” the statement said. It added that based on the sales of the two companies last year, the combined group’s revenue would amount to about $34 billion.
Smurfit did not provide financial details of the proposed merger, which is expected to be done through an Irish scheme of arrangement, a customary legal transaction requiring court approval.
The Irish company rejected a nearly 9 billion euro takeover bid from International Paper in 2018, saying even sweeter offers undervalued the group.
Regarding the proposed WestRock tie-up, the companies said the companies aim to achieve annual pre-tax savings of more than $400 million by the end of the first year after the deal. The partnership will entail one-time costs of about $235 million, the company said.
The combined packaging group will have an adjusted EBITDA of $5.5 billion.
Smurfit highlighted “strong cash flow for future growth and return on capital” and said combining the two companies’ 500 plants and 67 plants would give the combined company an “unrivaled presence in 42 countries, particularly Europe and the US.” geographic coverage”.
The company said the deal would deliver “compelling benefits” to shareholders through improved operational efficiencies and increased returns.
Founded in 1934, Smurfit was acquired by Jefferson Smurfit in 1938 and merged with Kappa Packaging in the Netherlands in 1974, strengthening its European leadership.
Any deal is subject to shareholder and regulatory approval. The company did not say when it expects the deal to close.
WestRock, which was formed in 2015 through the merger of MeadWestvaco and RockTenn, did not immediately respond to a request for comment.
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