Smurfit Kappa tumbles after agreeing merger with WestRock

(Sharecast News) - Smurfit Kappa shares tumbled on Tuesday after the company said it had agreed to merge with US rival WestRock in a deal that will create a $20bn packaging giant. Under the terms of the transaction, shareholders of US-based WestRock will receive one new Smurfit WestRock share and $5 in cash. This represents a total consideration equivalent to $43.51 per share, based on the Smurfit closing price on Monday.

The combination is expected to deliver high single digit accretion to Smurfit's earnings per share on a pre-synergy basis and in excess of 20% including run-rate synergies by the end of the first full year following completion.

Tony Smurfit, who will lead the combined group as chief executive, said: "This incredibly exciting coming together of our two great companies is a defining moment within the global packaging industry. Smurfit WestRock will be the 'Go-To' packaging partner of choice for customers, employees and shareholders.

"We will have the leading assets, a unique global footprint in both paper and corrugated, a superb consumer and specialty packaging business, significant synergies, and enhanced scale to deliver value in the short, medium and long term."

At 0820 BST, Smurfit shares were down 9.7% at 2,770p.