Packaging firm WestRock (NYSE:WRK) shares sprang up Tuesday on word Dublin-based packaging group Smurfit Kappa would combine with WestRock to create an industry juggernaut.
The companies will form Smurfit WestRock — set to be one of the largest packaging companies in the world — run through a holding company incorporated and domiciled in Ireland.
WestRock shareholders will receive one Smurfit WestRock share and $5 cash, equivalent to $43.51 per share, while Smurfit Kappa shareholders will receive one new share.
Smurfit Kappa investors will own approximately 50.4% of the new company.
FTSE 100 firm Smurfit Kappa said the deal is expected to be “high single digit accretive” to its existing earnings per share, and over 20% by the end of the first full year.
The paper-based packaging specialist was a pandemic beneficiary, boosted by the rise in e-commerce, and revenue and profits slipped in its 2023 first-half results.
“We’ve always said we had a very big gap in our portfolio because we were not involved in the United States. We’ve been looking over many years to figure out a way to get in there in a way that would reward our shareholders over the long term,” Smurfit Kappa CEO Tony Smurfit, who will lead the combined company, told the media.
WRK shares popped $1.85, or 5.4%, Tuesday to $35.90.
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