After reports last week of ongoing merger talks, Smurfit Kappa and WestRock have officially struck a deal, with reports confirming Irish paperboard and packaging company Smurfit Kappa has purchased Atlanta-based WestRock in an $11.2 billion deal that will create an industry giant known now as Smurfit WestRock.
The companies released a joint statement Sept. 12 announcing the merger, which is expected to close in the second quarter of 2024.
“This incredibly exciting coming together of our two great companies is a defining moment within the global packaging industry,” says Smurfit Kappa CEO Tony Smurfit, who will become CEO of Smurfit Westrock.
“We will have the leading assets, a unique global footprint in both paper and corrugated, a superb consumer and specialty packaging business, significant synergies and enhanced scale to deliver value in the short, medium and long term.”
Smurfit WestRock will have unparalleled geographic and product diversity with a culturally aligned customer focus and enhanced capabilities to serve customers globally, the companies say in a statement. Smurfit Kappa and WestRock generated a combined adjusted annual revenue of approximately $34 billion over the last 12 months, which, according to the companies, makes Smurfit WestRock the largest listed global packaging partner by revenue.
“We look forward to working with Smurfit Kappa to build a leading global platform that harnesses the strength of WestRock’s consumer portfolio, presents a truly comprehensive offering of packaging solutions for customers and delivers meaningful value to our shareholders today and into the future,” WestRock CEO David Sewell says.
“Smurfit Kappa shares our deep commitment to innovation across the packaging lifecycle, and we are confident that Smurfit WestRock will continue to lead the industry forward. I’m grateful to WestRock’s team members, whose hard work has made this combination possible, and excited for the many opportunities that will arise from becoming part of the partner of choice in our industry.”
In a move first reported last week by the Wall Street Journal, Smurfit WestRock will be incorporated and domiciled in Ireland with global headquarters in Dublin and North and South American operations headquartered in Atlanta.
Current Smurfit Kappa Chair Irial Finan will stay on as chair of Smurfit WestRock and Smurfit Kappa Chief Financial Officer Ken Bowles will become Smurfit WestRock CFO.
“We believe that all shareholders will benefit through ownership of a world-leading, sustainable packaging business; the combination of two of the industry’s most experienced teams with a proven track record of delivery; and a diverse product portfolio and compelling innovation offering,” Finan says.
Both WestRock and Smurfit Kappa are major consumers of recovered fiber. In fiscal year 2022, WestRock consumed 5.5 million tons of recovered fiber, while Smurfit Kappa, Europe’s largest paper and packaging producer, consumed about 8.8 million tons, according to the companies’ respective sustainability reports. The merger gives Smurfit WestRock a presence in 42 countries and brings together 500 converting operations and 67 mills.
WestRock has been moving forward with its footprint optimization strategy this summer, most recently announcing the closure of its paper mill in Tacoma, Washington, in what is the latest in a string of closures for the company that is targeting high-cost operations that need significant capital investment.
In its most recent third-quarter financial report, the company says it’s looking at further converting consolidations and reduction in average mill costs to drive additional savings. WestRock’s $5.1 billion in net sales are down 7.2 percent year over year in the third quarter and the company reports 359,000 tons of economic downtime, negatively impacting its adjusted earnings before interest, taxes, depreciation and amortization by $89 million.
Meanwhile, Smurfit Kappa’s most recent half-year financial results show a 9 percent decrease in revenue at 5.8 billion euros ($6.2 billion) and the company reports 144,000 tons of downtime taken at its European mills in the first half of this year.Latest from Recycling Today
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