Two major players in paper-based packaging, Smurfit Kappa and WestRock, have signed a US$11bn transaction to create a “a global leader in sustainable packaging with unparalleled scale, quality, product and geographic diversity”.
The new entity will be called Smurfit WestRock, combining Smurfit Kappa and WestRock’s complementary paper-based packaging operations. When it goes through in Q2 next year (subject to approvals), the acquisition of WestRock by Smurfit Kappa will create the world's biggest paper and packaging company.
Together, Smurfit Kappa and WestRock generated combined last twelve months’ adjusted annual revenue of approximately US$34 billion as of 30 June 2023, which would make Smurfit WestRock the largest listed global packaging company by revenue. Its EBITDA was US$5 billion
In Australia, WestRock Oceania is the former Hannapak printing packaging operation, based in Richmond, NSW, which was sold by the Hanna family to US operation WestRock in 2017 for $75m. WestRock is the country’s biggest manroland 900 house, running a quartet of the giant sheetfed offset presses around the clock.
The acquisition by Smurfit Kappa will see the 200 staff at the NSW WestRock plant joining what will be 100,000 employees at the combined group, which will operate 500 converting operations, and which has 67 mills producing 23 million tonnes of board annually.
The companies say the new combination will enhance Smurfit Kappa and WestRock’s existing offerings by creating the global “go-to” packaging partner of choice. They say it will bring together Smurfit Kappa’s "industry-leading" operational execution and innovation in European corrugated and containerboard as well as its large-scale pan-regional Americas presence, and WestRock’s leadership in the United States, as well as its strong footprint in Brazil and Mexico. It will operate across corrugated and consumer packaging, delivering a broad portfolio of packaging solutions serving what it says are diverse, growing, end-markets.
The transaction will involve the creation of a new holding company for the combined Smurfit WestRock. Smurfit WestRock will be incorporated and domiciled in Ireland with global headquarters in Dublin, Ireland and its North and South American operations will be headquartered in Atlanta, Georgia.
Subject to shareholder approvals, regulatory approvals and other customary closing conditions, the deal is expected to close in the second quarter of calendar year 2024.
Hanna Group was founded in 1957 by Charles Hanna Snr and his son, Charles Hanna, who started out manufacturing and selling printed advertising balloons from a small factory behind their home in Carlingford, NSW. It became Australia’s largest privately-owned, family-operated folding cartons company, operating from the 30,000sqm facility, printing folding carton for major brands. WestRock paid Hanna $75m for the business six years ago. The founder’s grandson Sam Hanna continued with the business when it was sold.
Charles Hanna passed away on Boxing Day 2021. He had been awarded an Order of Australia Medal in 2018, for his services to business and charity.
Commenting on the new deal, David Sewell, CEO of WestRock, said, “We look forward to working with Smurfit Kappa to build a leading global platform that harnesses the strength of WestRock’s consumer portfolio, presents a truly comprehensive offering of packaging solutions for customers and delivers meaningful value to our shareholders today and into the future. Smurfit Kappa shares our deep commitment to innovation across the packaging lifecycle, and we are confident that Smurfit WestRock will continue to lead the industry forward. I’m grateful to WestRock’s team members, whose hard work has made this combination possible, and excited for the many opportunities that will arise from becoming part of the partner of choice in our industry.”
Irial Finan, chair of Smurfit Kappa, said, “We are very pleased to announce today’s combination to create Smurfit WestRock. We believe that all shareholders will benefit through ownership of a world-leading, sustainable packaging business; the combination of two of the industry’s most experienced teams with a proven track record of delivery; and, a diverse product portfolio and compelling innovation offering.”
Alan Wilson, chair of WestRock, said: “This combination will enable WestRock to advance its key growth initiatives on a global scale while providing our shareholders with the opportunity to participate meaningfully in the combined company’s significant upside value potential.”
