Cleveland OH, September 7, 2023 – On September 7, Smurfit Kappa, a leading multinational paper packaging manufacturer, announced that it was in talks with WestRock, another leading multinational paper, paperboard, and corrugated packaging supplier, about a possible merger.
If the deal goes through as planned, the combined firm will be worth $20 billion
. As of June 30, 2023, the two companies reported combined revenue over the last 12 months of $34 billion
According to Freedonia Packaging Industry Analyst Christine O’Keefe
, “The merger will make the combined company the largest corrugated box supplier in the global market, supplanting International Paper, which was the clear leader in 2022.”
Overall, global demand for corrugated boxes is forecast 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 noted the complementary geographic operations
of Smurfit Kappa and WestRock saying, “Smurfit Kappa gets a majority of its revenues from Europe. In 2022, Smurfit Kappa only derived about 23% of its revenues from the Americas with a lot of that outside the US. So a merger with WestRock – which recognized 82% of its total FY 2022 revenue from the US -- will improve its positioning in this area.”
Packaging Analyst Mike Richardson observed that the history of the packaging industry
shows that big acquisitions often don’t occur in isolation. Recalling the spurt of activity in 2019 around the Berry Global-RPC and Bemis-Amcor combinations, “This could set off some other merger and acquisition activity in the paper packaging industry.”
Jennifer Christ, manager of Freedonia’s consumer insights research
, noted that the two companies benefit as paper packaging industry makes a solid play with sustainability in the mind of many consumers. She reported “In general, consumers rank paper-based packaging options highest in terms of perceived eco-friendliness. In the February-March 2023 edition of the Freedonia Group National Online Consumer Survey, paper (e.g., wrappers) and paperboard (e.g., cereal boxes and milk cartons) were highest with 54% and 53%, respectively, of consumers ranking these materials either one or two on a scale of one to five. Corrugated board (e.g., shipping boxes) followed slightly behind at 48%.”
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
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