A New Package Deal Could Be On The Horizon

A New Package Deal Could Be On The Horizon
Daniel Johnston

3 months ago2 mins

What’s going on here?

Two of the world’s biggest packaging companies are weighing up a merger.

What does this mean?

Cardboard boxes might not be exciting, but packaging is actually big business. After all, almost everything we buy, from e-commerce products to our favorite beers, comes bundled in some form of package or box. And now US-based WestRock and Ireland’s Smurfit Kappa, titans in the space, are discussing a potential union – with a combined value of $20 billion. That heft’s not the only boon: WestRock reckons the deal could lead to serious savings, pocketing over $400 million in the first year alone. Little wonder, then, that the firms are excited about the prospect, which would bring their 500-plus operations together to form the world’s premier packaging provider.

Why should I care?

For markets: Boxing clever.

Each firm currently commands about 20% of the market share for one hot commodity: the standard brown boxes used by retailers and e-commerce platforms. So when these giants talk of merging, it’s bound to send ripples across the industry – if competition regulators don’t object, that is. And this could be a well-timed move: for one, analysts predict a resurgence in demand next year. And for another, the ongoing global shift from plastic to more sustainable paper-based packaging – a niche these companies excel in – means they’re set for a sizable boost.

Global box market

The bigger picture: London’s burning.

If the deal does go ahead, it would spell more woe for the UK stock market. The tie-up’s set to see Smurfit Kappa cancel its premium listing on the LSE, and it wouldn’t be the first to bid Britain bye-bye: just this month CRH is due to switch to the US from London, and mining giant BHP skedaddled last year too. It’s not hard to see why: the British economy is flailing right now, while valuations on the UK stock market aren’t exactly sitting pretty.



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