Smurfit Kappa shares slump on WestRock merger
Smurfit Kappa and WestRock have agreed to merge to create the world's largest paper and packaging company worth nearly $20 billion. IGTV financial analyst @AngelineOng looks at why Smurfit’s shares are falling.
(Video Transcript)
More than 8% fall for Smurfit Kappa
We're seeing two giant packaging companies come together to create the world's biggest packaging company, WestRock and Smurfit Kappa Group teaming up. Let's take a look at the share reaction for Smurfit first and take a look at that. It is sinking, as you can see there.
WestRock is showing a slightly different picture. Let's have a look there at WestRock. This is not an all session stock. However, we are keeping a close eye on that just to see what the reaction is. But Smurfit, I can tell you, if we look at that chart there, it is currently staging more than 8% fall there on the news.
Investors unhappy with the deal
Now, let's get you through the details. Westrock stockholders will get one new Smurfit WestRock share and $5 in cash for each share that they hold, which works out to be $43.51 a share. I believe the new company will be called Smurfit WestRock and the deal value offers more than 36% premium to WestRock's closing price on 6 September 2023 before the report of this merger.
However, it looks like investors are not happy about the details of this merger. Analysts at JP Morgan and Jefferies believe that the premium being paid to WestRock was higher than most Smurfit investors were hoping for. Well, let's see if we count down to the reaction on WestRock. Smurfit cap, as I mentioned earlier, falling more than 8% in Ireland.
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