Two of the world’s largest packaging companies, WestRock of the US and Ireland’s Smurfit Kappa are in advanced merger talks to create a global giant valued at nearly $20bn.
The combined company, to be named Smurfit WestRock, would have its global headquarters in Dublin and Americas operations based in Atlanta, Georgia.
It would be listed on the New York Stock Exchange and cancel its premium London listing and its listing on the Euronext Dublin exchange, making Smurfit, Europe’s biggest packaging company, the latest major company to retreat from London in favour of the US.
The combined group would retain a secondary listing in London and is expected to be led by Tony Smurfit, chief executive of the Irish company since 2015.
The proposed tie-up between the packaging companies would create the world’s go-to packaging partner. The joint group would have combined revenue of about $34bn, based on sales from the last year at the two companies.
Smurfit provided no financial details of the proposed merger transaction, expected to happen through an Irish scheme of arrangement, a routine legal transaction that would require court approval.
On the proposed WestRock tie-up, it said the two companies were targeting more than $400mn in annual pre-tax savings by the end of the first year following the deal. The tie-up would require one-off costs of about $235mn.
The combined packaging group would have adjusted earnings before interest, tax, depreciation and amortisation of $5.5bn.
Smurfit highlighted strong cash flows for future growth and capital returns and said combining the two firms 500 operations and 67 mills would give the merged company unparalleled geographic reach across 42 countries, especially in Europe and the US.
The deal would deliver “compelling benefits” to shareholders based on improved operating efficiency and increased returns.
Any deal would be subject to shareholder and regulatory approval. The company did not say when it expected the deal to complete.