Freedonia Industry Analyst Perspectives on the Smurfit Westrock Merger

In July 2024, the deal to combine Smurfit Kappa and WestRock was completed, and Smurfit Westrock began trading as the new entity under the SW ticker symbol on the NYSE and under the SWR symbol on the LSE.

Our Industry Analysts have weighed in on the merger.

Senior Analyst Mike Richardson: While many industries go through waves of merger and acquisition activity, such activity is more of a constant in the paper and paperboard industry in general, and the corrugated box industry in particular. The combination of Smurfit Kappa and WestRock is larger than most such transactions, but it’s really just the most recent in a long, long line of similar moves.

The histories of Smurfit Kappa and WestRock are populated with companies that live in recent memory, as well as those that opened for business more than 175 years ago. Mead Paper – which eventually become part of the “West” branch of this new agglomeration – was founded in 1846.

Like boxes stacked on top of one another, companies acquired smaller companies, large companies merged with other large companies…and in 2024, a handful of large enterprises account for a large share of the corrugated box market in Europe and the Americas, as well as significant shares of the markets for other paper and paperboard packaging products.

And while the new Smurfit Westrock will be hugely impactful on the global packaging market, longtime observers of the corrugated world will tell you that it’s the latest M&A move, and unlikely to be the last one (even for a while).

For instance, we’re still expecting International Paper to complete its acquisition of DS Smith by the 4th quarter of 2024. Additionally, companies such as Mondi (which lost to International Paper in the bidding war for DS Smith) and Brazil’s Suzano (which made noises earlier this year about an attempt to buy International Paper) have publicly stated multinational growth plans.

Freedonia Packaging Industry Analyst Christine O’Keefe: The merger makes the combined company the largest corrugated box supplier in the global market. At least until International Paper (the company Smurfit Westrock surpassed) completes its acquisition of DS Smith later this year.

The Global Corrugated Boxes industry study forecasts demand for corrugated boxes to increase 2.6% per year to 296 billion square meters in 2027. Top opportunities include the e-commerce market where demand for corrugated boxes in 2022 reached levels that were nearly five times demand levels in 2012. Growth will remain robust as e-commerce increases its share of retail sales, with demand rising 10% annually. Demand will be driven by the US and the Asia/Pacific region, which combined will account for 71% of absolute gains.

Freedonia Corporate Research Analyst Joe Iorillo: The combination of the two companies brings together complementary geographic operations. Smurfit Kappa gets a majority of its revenues from Europe, while WestRock operated mostly in the US. In 2022, Smurfit Kappa only derived about 23% of its revenues from the Americas with a lot of that outside the US, while WestRock recognized 82% of its total FY 2022 revenue from the US.

We also did a blog on September 15, 2023 that went through the history and evolution of the two companies: Smurfit-Kappa & WestRock to Combine Again?

See additional analysis of opportunities and trends in Freedonia’s report Global Corrugated Boxes. Coverage of this and other areas in paper, paperboard, and corrugated packaging can be found on the Freedonia Group Packaging Industry page.