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Paper Recycling January 31, 2018 02:30:40 PM

WestRock Announces Acquisition of Paper and Packaging Producer

Paul Ploumis
ScrapMonster Author
Also, WestRock hopes to elevate the mix of virgin fiber-based paper in the company’s paper portfolio. WestRock’s overall mix of virgin fibre is expected to rise from 65% to 67%.
WestRock Announces Acquisition of Paper and Packaging Producer

SEATTLE (Scrap Monster): WestRock Company has signed a definitive agreement to acquire all of the assets of Illinois-based Kapstone Paper and Packaging Corp. The company has been making big investments in modernizing existing facilities, construction of new facilities and strategic acqusition of healthy corporations. Towards end-2017, it had announced acquisition of Plymouth Packaging, Inc.- a leading corrugated box packaging company based in Plymouth, Michigan.

Pursuant to the agreement, WestRock will acquire 100% of the outstanding Kapstone shares for $35 per share, assuming a net debt of approximately $1.36 billion. The cash consideration will be financed through the issuance of new debt. The acquisition cost is valued at nearly $4.9 billion. The transaction is subject to several customary closing conditions and is expected to close towards end-Q3 this year. Upon closing of the transaction, Kapstone will be integrated into WestRock’s Corrugated Packaging segment.

According to Steve Voorhees, CEO of WestRock, Kapstone is a great fit with the company. WestRock looks forward to welcome Kapstone employees to its fold, he noted. Meantime, Kapstone’s president and CEO, Matt Kaplan stated that the transaction is expected to turn out beneficial not only to its employees but also its customers. The company’s work culture is closely aligned to that of WestRock, he added.

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The addition of Kapstone’s corrugating packaging and distribution operations will help to better serve its customers, particularly those in the western US region. Also, accumulation of Kapstone’s specialty kraft paper products will result in diversification of its portfolio of paper and packaging solutions. The transaction is expected to generate nearly $200 million in cost synergies and performance improvements, strengthen its presence on the W3est Coast and further broaden the company’s portfolio of differentiated paper and packaging solutions with the addition of new paper grades and network of distribution facilities.

Also, WestRock hopes to elevate the mix of virgin fiber-based paper in the company’s paper portfolio. WestRock’s overall mix of virgin fibre is expected to rise from 65% to 67%. Incidentally, Kapstone’s paper is made out of 78% virgin fiber and 22% recovered fiber.

Founded in 2005, Kapstone is a leading producer and distributor of containerboard, corrugated products and specialty papers. It also owns Victory packaging, a packaging and distribution company with facilities across the US, Canada and Mexico. With nearly 90 locations in North America, the company presently employs nearly 6,200 people.

 

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