Smurfit Kappa, a FTSE 100 company, and WestRock, an S&P 500 company, have announced a definitive transaction agreement worth $11 billion to merge and form Smurfit WestRock. The merger comes at a total consideration equivalent to $43.51 per WestRock share, based on the closing share price of Smurfit Kappa on September 11, 2023. The deal aims to create a global leader in sustainable packaging, with estimated combined annual revenue of approximately $34 billion as of June 30, 2023.

Transaction Structure and Shareholder Implications

Under the terms of the agreement, for each share of common stock of WestRock, stockholders will receive one new Smurfit WestRock share and $5 in cash. Smurfit Kappa shareholders will receive one new share for each of their existing ordinary shares. Following the transaction’s completion, Smurfit Kappa and WestRock shareholders are expected to own approximately 50.4% and 49.6% of Smurfit WestRock, respectively. The transaction is subject to regulatory approvals, with an expected close in the second quarter of 2024.

CEOs Discuss the Significance of the Merger

Tony Smurfit, CEO of Smurfit Kappa, stated, “This incredibly exciting coming together of our two great companies is a defining moment within the global packaging industry. Smurfit WestRock will be the ‘Go-To’ packaging partner of choice for customers, employees, and shareholders.” David Sewell, CEO of WestRock, added, “We look forward to working with Smurfit Kappa to build a leading global platform that harnesses the strength of WestRock’s consumer portfolio.”

Strategic and Operational Benefits of the Combination

The new entity, Smurfit WestRock, aims to leverage complementary portfolios to become the global leader in sustainable packaging. The company will operate across 42 countries, focusing on renewable, recyclable, and biodegradable packaging solutions. This merger will offer broader opportunities for nearly 100,000 employees and aims for increased operating efficiency across approximately 500 converting operations and 67 mills.

Both boards have unanimously approved the transaction and recommend their shareholders to vote in favor. Subject to conditions, the transaction is expected to conclude in the second quarter of 2024.

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