WestRock Company Bolsters $4.9 Billion Merger with Kapstone

SEATTLE (Scrap Monster): WestRock Company has reiterated that the multi-billion dollar merger deal with Kapstone Paper & Packaging Co. is still on track, despite intermediate delays on account of intervention by the U.S. Department of Justice (DOJ) .

According to Steve Voorhees, CEO, WestRock, the extra scrutiny from the DOJ has not pulled back it from the $4.9 billion merger deal with the Illinois-based paper packaging company. It must be noted that the DOJ had earlier requested additional information regarding the deal under the federal antitrust laws. He hoped that the deal would receive conditional approval from federal regulators at the earliest. The merger needs to be signed off by Kapstone shareholders too, Voorhees added.

Towards end-January this year, WestRock had signed a definitive agreement to acquire all of the assets of Kapstone. As per deal it was agreed that WestRock will purchase 100% of the outstanding shares of Kapstone at $35 per share, assuming a net debt of approximately $1.36 billion. It was announced that the cash consideration would be financed through the issuance of new debt.

The merger deal will integrate Kapstone to WestRock’s Corrugated Packaging Segment. The transaction is expected to generate nearly $200 million in cost synergies and performance improvements. Further, WestRock expects further strengthening of its presence in the U.S. West Coast region and broadening of its product portfolio with new additions in terms of packaging solutions and paper grades. The merger is also expected to help WestRock elevate its overall mix of virgin fibre from 65% to 67%.

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The proposed merger would bring together the nation’s second and fifth largest paper and packaging companies. Kapstone owns 4 paper mills, 22 converting plants and more than 65 warehouses and distribution centers across North American region.