Smurfit $11 bln bid for dominance risks paper cut

WestRock Co

12/09/2023 11:58

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Lisa Jucca
       MILAN, Sept 12 (Reuters Breakingviews) - The Irish
cardboard-box king is handing a roughly 40% premium to investors
in US rival WestRock as part of a deal to form a sector leader.
The price overshadows chunky costs cuts, implying low returns.
Yet standing still in a rapidly softening packaging market is
not an option.
        
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    CONTEXT NEWS
    Smurfit Kappa and WestRock on Sept. 12 announced a deal that
would create the world’s largest listed packaging company,
measured by revenue. 
    If investors agree to the transaction, the Irish group would
pay WestRock shareholders $5 in cash and one new share in
Smurfit WestRock, a holding company that would be domiciled and
headquartered in Dublin. 
    Smurfit Kappa’s existing shareholders will ultimately own
50.4% of the combined group, while WestRock’s will have the
other 49.6%. 
    The companies plan to cut more than $400 million of costs
per year as a result of the combination. 
    Smurfit Kappa’s Ireland-listed shares fell 9.8% to 32.32
euros as of 0921 GMT on Sept. 12. 

 (Editing by Liam Proud and Streisand Neto)
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