Rock-Tenn Acquiring Smurfit-Stone

The boards of directors for RockTenn and Smurfit-Stone Container Corp. have approved an agreement whereby Smurfit Stone will become a wholly owned subsidiary of RockTenn. Upon completion of the deal, the company will have manufacturing mill capacity of 9.4 million tons.

The transaction has been unanimously approved by the boards of directors of both companies, and will create a $9 billion company in the North American paperboard packaging market. Upon closing, RockTenn will maintain its headquarters in Norcross, Ga.

Smurfit-Stone has manufacturing mill capacity of 7 million tons, and when combined, RockTenn will have 9.4 million tons of total production capacity, including 7.5 million tons of mill production in the containerboard market.

James Rubright, RockTenn’s chairman and CEO, says, “RockTenn’s acquisition of Smurfit-Stone is another major step in our transformation of RockTenn to be the most respected company in our business with a laser focus on exceeding our customers’ expectations and creating long-term shareholder value. The containerboard and corrugated packaging industry is a very good business, and U.S. virgin containerboard is a highly strategic global asset. With this acquisition, RockTenn’s fiber input ratio will be 55 percent virgin and 45 percent recycled. We believe this transaction provides the greatest possible career opportunities for our co-workers from both companies.”

Patrick Moore, Smurfit-Stone’s CEO, says, “The Smurfit-Stone management team and the board of directors are sharply focused on creating value for shareholders. This transaction immediately achieves this objective, creating a stronger combined company that is well positioned to deliver long-term value to shareholders and high-quality, innovative packaging solutions to its valued customers.”

According to a release announcing the deal, the combined RockTenn and Smurfit-Stone companies will result in the following for the company:

• Becoming the second largest containerboard producer in North America

• Becoming the second largest producer of coated recycled board

• Creating a management team with strong record of shareholder value creation and excellent record of integrating acquisitions

• Creating a balanced fiber input mix with 55 percent virgin fiber and 45 percent recycled fiber

• Expanding Rock-Tenn’s geographic footprint to the Midwest and West Coast

• Providing an opportunity to recognize benefits from about $500 million of savings at Smurfit-Stone

• Develop a conservative capital structure with significant liquidity

• Provide an opportunity to improve results through cost reduction and capital investment

The transaction is expected to close in the second calendar quarter of 2011 and is subject to customary closing conditions, regulatory approvals, as well as approval by both RockTenn and Smurfit-Stone stockholders.