Shares in London-listed Smurfit Kappa have plunged after it revealed a deal to create the world’s largest listed paper and packaging company, worth almost $20bn (£16bn).
The FTSE 100 firm said that under the terms of the merger with WestRock, shareholders in its current US rival would receive one share in the new company, to be called Smurfit WestRock, and $5 in cash for each share they have.
It worked out to $43.51 per share, the statement said, a 36% premium to WestRock’s closing price after news of negotiations was released last week.
The terms were not well received when the market gave its reaction, with Smurfit’s shares down more than 11% at one stage on Tuesday.
Smurfit Kappa chief executive Tony Smurfit, chief financial officer Ken Bowles and chair Irial Finan will all assume the same roles in the new company, it was announced.
The combined entity will be domiciled in Ireland with its global headquarters in Dublin. It will be listed on the New York Stock Exchange and also have a standard listing in London.
Mr Smurfit told Sky’s US partner CNBC: “We’ve always said we had a very big gap in our portfolio because we were not involved in the United States.
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“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.
“We identified (WestRock) as an asset that we can develop with and combine with to be an even better asset. So after a series of negotiations, we finally got to an agreement at 07.15 this morning to finally close out this deal, which I think is going to be fantastic for our shareholders in the long-term, medium and short-term.”
