425: Smurfit WestRock Limited Files Prospectus for London Stock Exchange Listing Following Merger

Smurfit WestRock Limited prepares for its UK Admission on the London Stock Exchange following the proposed combination of Smurfit Kappa Group plc and WestRock Company.

Summary

• Smurfit WestRock Limited has filed a prospectus for the UK Admission of its ordinary shares on the London Stock Exchange (LSE).
• This follows the proposed combination of Smurfit Kappa Group plc and WestRock Company, where both will become wholly-owned subsidiaries of Smurfit WestRock.
• The UK Admission is expected to become effective and dealings on the LSE will commence at 8:00 a.m. UK time on the first Business Day following Completion.
• The prospectus details the terms of the Combination, including the acquisition of Smurfit Kappa via a scheme of arrangement and the merger of a Smurfit WestRock subsidiary with WestRock.
• Up to 519,420,158 ordinary shares in Smurfit WestRock are expected to be issued to Smurfit Kappa and WestRock shareholders.
• Smurfit WestRock will also apply for its shares to be listed on the New York Stock Exchange (NYSE).
• The document outlines key risks associated with investing in Smurfit WestRock Shares, including market volatility, integration challenges, and economic factors.
• The Combined Group is targeting annual pre-tax run-rate synergies in excess of $400 million by the end of the first full year post-Completion.
• The total costs, charges and expenses in connection with the UK Admission are estimated to be approximately $20 million.

Sentiment

Score: 7

Explanation: The document is largely factual and positive, outlining the benefits of the merger and the future prospects of the combined company. However, it also includes a detailed section on risk factors, which tempers the overall sentiment.

Positives

• The Combination is expected to create a global go-to packaging partner of choice.
• The Combined Group will have extensive geographic reach and scale with operations in attractive product segments and growing markets.
• The Combination is expected to provide immediate and long-term value creation for both Smurfit Kappa Shareholders and WestRock Shareholders.
• The Combined Group is targeting annual pre-tax run-rate synergies in excess of $400 million by the end of the first full year post-Completion.
• Smurfit Kappa has a strong track record of successfully integrating acquisitions.
• The Combined Group will benefit from strong operating cash flows, providing it with significant capital allocation flexibility.
• The Combined Group will have a strong asset base, a global footprint in both containerboard and corrugated packaging, a leading consumer and specialty packaging business, material synergies, and enhanced scale to deliver value in the short, medium and long-term.

Negatives

• Investing in Smurfit WestRock Shares involves risks, including market volatility and potential loss of invested capital.
• The Combined Group may not realize all of the benefits of the Combination or such benefits may take longer than anticipated or may be lower than estimated.
• The IRS may not agree with the conclusion that Smurfit WestRock is to be treated as a foreign corporation for US federal income tax purposes following the Combination or may assert that Smurfit WestRock is subject to certain adverse consequences for US federal income tax purposes.
• The market price and trading volume of Smurfit WestRock Shares may be particularly volatile in the period following Completion.
• There has been no prior public market for Smurfit WestRock Shares on either the LSE or the NYSE, an active market for such securities may not develop or be sustained and trading prices may vary.
• Smurfit WestRock will seek Irish High Court approval of the creation of distributable reserves. Smurfit WestRock expects this approval will be forthcoming, but cannot guarantee it.

Risks

• Economic and financial market conditions, geopolitical conflicts, and other social and political unrest or change could materially adversely affect the Combined Groups business.
• Extraordinary events may significantly impact Smurfit Kappas and WestRocks, and following Completion the Combined Groups, businesses.
• Uncertainty, downturns, actions taken by competitors or other changes in the paper and packaging industry may adversely affect the Combined Group.
• Interruptions in any of Smurfit Kappas or WestRocks, and following Completion the Combined Groups, facilities for any significant length of time could have a material adverse effect on their businesses.
• Price fluctuations in, or shortages in the availability of, energy, transportation and raw materials could materially adversely affect Smurfit Kappas, WestRocks or, following Completion, the Combined Groups business.
• Each of Smurfit Kappa and WestRock is, and following Completion the Combined Group will be, subject to cybersecurity risks.
• Each of Smurfit Kappa and WestRock face, and following Completion the Combined Group will face, challenges associated with ESG matters, including climate change and scarce resources.
• Adverse credit and financial market events and conditions could, among other things, impede access to or increase the cost of financing, which could have a material adverse impact on the Combined Groups business.
• Completion is subject to a number of conditions which may not be satisfied or waived, or which may not be capable of satisfaction without the imposition of undertakings, conditions, or divestments, which could be material.
• The Combined Group may not realize all of the benefits of the Combination or such benefits may take longer than anticipated or may be lower than estimated.
• The IRS may not agree with the conclusion that Smurfit WestRock is to be treated as a foreign corporation for US federal income tax purposes following the Combination or may assert that Smurfit WestRock is subject to certain adverse consequences for US federal income tax purposes.

Future Outlook

Smurfit WestRock believes the outlook for the paper and packaging industry remains positive and anticipates that the Combined Group will be well-positioned as a global leader in sustainable packaging to benefit from the strong secular trends.

Management Comments

• Smurfit WestRock believes the Combination will create a global go-to packaging partner of choice and represents a highly compelling opportunity to create value for stakeholders.
• The Combination brings together two highly complementary portfolios and sets of capabilities benefitting customers, employees and shareholders.
• The Combined Group will have extensive geographic reach and scale with operations in attractive product segments and growing markets.

Industry Context

The announcement relates to the paper and packaging industry, where companies are consolidating to achieve greater scale, geographic reach, and product diversity. The merger aims to create a global leader in sustainable packaging, responding to increasing demand for eco-friendly solutions.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• However, it mentions that Smurfit Kappa is one of the world's largest integrated manufacturers of paper-based packaging products.
• WestRock is described as a multinational provider of sustainable fibre-based paper and packaging solutions.
• The document highlights the Combined Groups intention to maintain a strong investment grade credit rating, which is a common benchmark for large corporations.
• The document does not provide specific comparisons to industry standards.
• However, it mentions that Smurfit Kappa is one of the world's largest integrated manufacturers of paper-based packaging products.
• WestRock is described as a multinational provider of sustainable fibre-based paper and packaging solutions.
• The document highlights the Combined Groups intention to maintain a strong investment grade credit rating, which is a common benchmark for large corporations.

Management Changes

Stakeholder Impact

• The Combination is expected to create value for stakeholders, including customers, employees, and shareholders.
• The Combined Group will provide a broader opportunity set for employees, combining the best talent of Smurfit Kappa and WestRock.
• The Combined Group will collaborate with forward-thinking customers by sharing superior product knowledge, market understanding and insights in packaging trends to ensure business success in their markets.

Next Steps

• Smurfit Kappa Shareholder Approval
• WestRock Shareholder Approval
• NYSE Admission
• FCA acknowledgement of UK Admission
• Sanction of the Scheme by the Irish High Court
• Completion of the Combination

Key Dates