If the deal goes through, Smurfit WestRock would be positioned as a global packaging leader on account of the two groups’ complementary product portfolios and strong geographic reach.
Dublin-headquartered paper packaging group Smurfit Kappa is in talks to merge with WestRock, a US fiber-based packaging solutions specialist. The deal would give rise to a new holding company, Smurfit WestRock, with global headquarters in Dublin, Ireland and the Americas business located in Atlanta, Georgia.
Complementary portfolios & vast geographic footprint
WestRock and Smurfit Kappa are said to have "highly complementary" portfolios, according to Smurfit Kappa, "with unique product diversity and innovative sustainability capabilities [...] across renewable, recyclable and biodegradable packaging solutions." The two entities' combined global reach would cover some 42 countries, with a particularly strong presence in Europe and the Americas.
Commenting in a statement on the potential merger, Benher Gracio, Business Fundamentals Analyst at Globaldata, confirmed that the deal would create a "top global paper and packaging player." He continued: "For both companies, corrugated packaging is the mainstay with strong market positions. In terms of production volume, Smurfit Kappa holds a leadership position in Europe [as well as a] significant presence in Latin America. While WestRock has a strong manufacturing presence with 145 facilities primarily concentrated in the Americas, Smurfit Kappa operates over 350 facilities; the majority are located in 23 European countries, but a sizeable presence in the Americas counts close to 100 facilities across 13 countries."
The group would have around 500 converting operations and 67 mills, with around 100,000 employees. In comparison, the industry's current leader, International Paper Co., operates over 220 facilities and 28 mills.
Combined revenue for both Smurfit Kappa and WestRock for the last 12 months ending June 30, 2023 stands at $34bn, while adjusted Ebitda is $5.5bn. Synergies (incurring a one-off cash cost of around $235m) of more than $400m are forecast at the end of the first full year after the deal is completed. Watch this space.