Cleveland OH, September 12, 2023 – On September 12, Smurfit Kappa, a leading multinational paper packaging manufacturer, announced terms for the combination with WestRock, another leading multinational paper, paperboard, and corrugated packaging supplier, for $11.15 billion.
If the deal – which is expected to close in the second quarter of 2024 -- 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
WestRock shareholders will get $5 in cash and a share of the new company – Smurfit WesRock – in exchange for their existing shares. Once complete, Smurfit Kappa shareholders will own 50.4% of the combined business.
The new entity will retain WestRock’s listing on the New York Stock Exchange, but will be headquartered in Ireland, where Smurfit has been domiciled. It will have a global workforce of about 100,000 employees.
Freedonia Group industry data:
- 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.
Quotes from Freedonia Group analysts:
- Market Positioning. "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." – Christine O'Keefe, Packaging Industry Analyst
- Geographic Reach. "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. Complementary regional operations will also likely smooth the path to closing this deal without major changes." – Joe Iorillo, Corporate Research Analyst
- Advantages for their Operations. “The two companies benefit as paper packaging industry makes a solid play with sustainability in the mind of many consumers. 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%.” -- Jennifer Christ, Manager of Consumer Insights Research
- Future M&A Prospects in Packaging. “The history of the packaging industry shows that big acquisitions often don’t occur in isolation. Recall the spurt of activity in 2019 around the Berry Global-RPC and Bemis-Amcor combinations. This too could set off some other merger and acquisition activity in the paper packaging industry.” -- Mike Richardson, Packaging Industry Analyst
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