The creation of a new holding company, Smurfit WestRock, would be the expected outcome of the Potential Combination.
Corrugated packaging giant Smurfit Kappa has confirmed it is talks with WestRock over a possible merger. The agreement would create a packaging behemoth that provides everything from corrugated storage boxes to beer carriers and e-commerce shipping materials.
Strategic and Operational Rationale
The Boards of Smurfit Kappa and WestRock believe the Potential Combination will create the global “Go-To” packaging partner of choice:
- Unparalleled geographic reach across 42 countries with a significant presence across both Europe and the Americas
- Complementary portfolios with unique product diversity and innovative sustainability capabilities, with breadth and depth across renewable, recyclable and biodegradable packaging solutions
- Broader opportunities for approximately 100,000 employees
- Improved operating efficiency and increased returns across over 500 converting operations and 67 mills
- Experienced management teams with strong track records of execution and delivery to support global operations
- Combining two highly complementary portfolios to create a global leader in sustainable packaging
Financial Rationale
The Boards of Smurfit Kappa and WestRock believe the Potential Combination represents a unique opportunity to create value:
- Combined last twelve months’ revenue and adjusted EBITDA as of 30 June 2023 of approximately $34 billion and $5.5 billion, respectively
- Strong cash flows for future growth and capital returns
- Targeting annual pre-tax run-rate cost synergies in excess of $400 million at the end of the first full year following completion; delivery of synergies expected to require estimated one-off cash costs of approximately $235 million to be incurred
- Expected to deliver compelling benefits to Smurfit WestRock shareholders, with transaction structure providing the opportunity for both sets of shareholders to participate meaningfully in Smurfit WestRock’s significant upside value potential
- Disciplined capital allocation expected to deliver improved operating efficiency and increased returns
- Committed to strong investment grade credit rating
Smurfit WestRock would be incorporated and domiciled in Ireland with global headquarters in Dublin, Ireland and North and South American operations headquartered in Atlanta, Georgia. The Potential Combination would be effected through an Irish scheme of arrangement involving Smurfit Kappa and a merger of a subsidiary with WestRock.
corruga.expert
