(Bloomberg) -- Paper and packaging giants WestRock Co. and Smurfit Kappa Group Plc are in talks to merge, potentially creating an industry giant with a market value of about $20 billion.
The companies are discussing the key terms of a possible combination to create Smurfit WestRock, according to a statement. WestRock shareholders could receive shares of the combined entity should a merger proceed, the statement said.
The deal would create a packaging giant that provides everything from corrugated storage boxes, to beer carriers to e-commerce shipping materials. The paper and packaging industry has been heavily consolidating for years, as market players seek scale to cut costs and better serve large customers.
Smurfit Kappa declined as much as 2.9% in early Dublin trading and was 1.7% lower at 8:40 a.m.
Following the completion of the potential deal, ordinary shares of Smurfit WestRock would be listed on the New York Stock Exchange. Smurfit Kappa’s premium listing on the London Stock Exchange would be cancelled and the combined entity would go for the standard listing segment. Smurfit Kappa would also delist from Euronext Dublin.
Smurfit WestRock would be incorporated and domiciled in Ireland with global headquarters in Dublin, the statement said. Its North and South American operations would be based in Atlanta, Georgia.
Due diligence is ongoing and definitive terms and conditions will be set out in a further announcement, the companies said, after The Wall Street Journal first reported on the merger talks. There’s still no certainty a transaction will definitely happen, they added.
Shares of Westrock have fallen about 9% this year, giving the firm a market value at about $8 billion. Smurfit is down 5.8% this year, valuing the company at €9.5 billion.
--With assistance from Kiel Porter.
(Updates with share price in fourth paragraph)
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