Ireland's Jefferson Smurfit (JSG) and Kappa Packaging have announced plans to merge, forming a paper-based packaging giant with operations in 32 countries and 43,000 staff.
Located in 23 European and nine Latin American companies, these operations will have a combined annual capacity of 6.1M tonnes of container board and 5.1M tonnes of corrugated, making the business a world leader in corrugated, a European leader in container board and a pre-eminent player in both paper grades in Latin America.
Under the proposed deal, subject to EU competition approval and consultation with employee representative organisations, JSG shareholders will have a 58.3% stake 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."
In 2004 JSG had sales of €4.8bn, while Kappa's revenues were €2.8bn.