Located in 23 European and nine Latin American companies, these operations will have a combined annual capacity of 6.1m tonnes of containerboard and 5.1m tonnes of corrugated, making the business a world leader in corrugated, a European leader in containerboard and a pre-eminent player in both paper grades in Latin America.
Under the proposed deal, subject to a number of conditions, including EU competition approval and consultation with employee representative organisations, JSG shareholders will have a 58.3% stake in the business and Kappa shareholders 41.7%, the latter also receiving €300m in cash and a €75m subordinated promissory note.
The two companies believe the merger provides an excellent "fit" in that JSG already holds leading market positions in Latin America and a strong presence in Western and Southern Europe, while Kappa is particularly strong in Northern and Eastern Europe.
Gary McGann, Jefferson Smurfit ceo says: "We identified the need for structural change within the European paper-based packaging industry. This proposal is an exciting first step in that process and would, we believe, benefit all stakeholder groups of the combined company in a challenging operating environment.
"A combination of JSG and Kappa would produce a focused leader in paper-based packaging, with compelling strategic, operation and geographic fit. A well-invested asset base, together with an extensive geographic presence across Europe, should significantly enhance our ability to serve current and prospective customers."
Frits Beurskens, Kappa Packaging ceo, says: "The merger of Kappa Packaging and Jefferson Smurfit Group would create a platform to build further on our successes and bring together highly complementary businesses. In the rapidly changing environment in which we operate, combining our respective skills and strengths will be beneficial to all stakeholder groups."
In 2004 JSG had sales of €4.8bn, while Kappa's revenues were €2.8bn. Employee numbers are 27,450 and 15,350 respectively.
