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.