(Alliance News) - Ireland's Smurfit Kappa Group PLC on Thursday said it is talking to the US's WestRock Co about a potential mostly share-based combination to create a packaging giant to be called Smurfit WestRock.
The company would be based at Smurfit's current location of Dublin, while its North and South American operations would headquartered at WestRock's base in Atlanta, Georgia.
However, the combined group would de-list from Euronext Dublin and cancel its premium listing in London, moving to a standard listing. It would have its primary listing on the New York Stock Exchange, where WestRock is currently traded, and seek US equity index inclusion.
Smurfit is the third large Irish listing to be lost to the London Stock Exchange. CRH PLC also will move its primary listing to New York, while Kingspan Group PLC will cancel its London listing altogether and keep a primary listing on Euronext Dublin.
The Irish company said the combination would employ about 100,000 people, operating 67 paper and packaging mills. Combined adjusted earnings before interest, tax, depreciation and amortisation would have been USD5.5 billion on USD34 billion in revenue in the 12 months that ended June 30.
Smurfit said the pair would target annual pretax run-rate cost synergies of more than USD400 million at the end of the first full year following the completion of the merger. Delivering this ongoing cost savings will require a one-time cash cost of USD235 million.
The combination would be effected by WestRock shareholders receiving consideration primarily in shares of the combine group.
WestRock shares closed down 0.5% at USD31.88 in New York on Wednesday, giving it a market capitalisation of USD8.17 billion. The shares rose 12% to USD35.58 in after-hours trade.
Smurfit shares were down 1.8% at 3,162.00 pence in London early Thursday. It has a market cap of about GBP8.24 billion.
By Tom Waite, Alliance News editor
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Smurfit Kappa (SKG)
CRH (CRH)