By P&PC Staff
By P&PC Staff
Jan. 30, 2018 – WestRock Company has announced it will acquire KapStone Paper and Packaging Corp. for approximately $4.9 billion.
According to The Daily News, the deal — which includes the Longview paper mill — would create one of the largest providers of paper and packaging products in the United States.
Founded in 2005 and headquartered in Northbrook, Ill., KapStone is a North American producer and distributor of containerboard, corrugated products and specialty papers, including liner and medium containerboard, kraft papers and saturating kraft. KapStone also owns Victory Packaging, a packaging solutions distribution company with facilities in Canada, the United States and Mexico.
“KapStone is a great fit with WestRock. Their complementary corrugated packaging and distribution operations will enhance WestRock’s ability to serve customers across our system, particularly in the western United States, and the addition of their specialty kraft paper products that we do not make enhances our differentiated portfolio of paper and packaging solutions,” said Steve Voorhees, CEO of WestRock. “Importantly, KapStone and WestRock share the same dedication to serving customers. We look forward to welcoming the KapStone team members to WestRock and working with them to help make WestRock an even better company.”
“The agreement to combine with WestRock is a testament to the tremendous company we have built and the hard work and accomplishments of the KapStone team,” said Kaplan CEO Matt Kaplan. “The transaction enables us to deliver an immediate and compelling cash premium to our shareholders. As we began to understand WestRock’s principles, we realized how closely aligned our cultures are. As a result, we believe strongly that this will be beneficial to both our employees and customers.”
Upon completion of the transaction, KapStone will be integrated into WestRock’s Corrugated Packaging segment.
According to the parties, the deal will expected to:
• Generate annual run-rate cost synergies and performance improvements of approximately $200 million by the end of fiscal 2021 that WestRock expects will be captured through the integration of the KapStone operations into WestRock’s corrugated packaging system. The categories of benefits include process and capital improvements at mill and box plant locations, converting and network optimization, procurement and administrative efficiencies. The acquisition will enable WestRock to supply additional corrugated packaging to Victory Packaging. The acquisition will accelerate WestRock’s plans to improve margins in its North American corrugated packaging business.
• Strengthen WestRock’s presence on the West Coast. In addition, this expansion opens new opportunities for WestRock to sell the full suite of its product portfolio to KapStone’s current customers in this region.
• Broaden WestRock’s differentiated paper and packaging solutions portfolio. The addition of KapStone’s complementary specialty kraft paper offerings that WestRock does not offer today enables WestRock to provide a broader product portfolio to existing customers, as well as provides new opportunities to sell WestRock’s offerings to KapStone’s customers.
• Increase mix of virgin fibre based paper in WestRock’s paper portfolio. KapStone’s 3 million tonnes of paper is made using 78 per cent virgin fibre and 22 per cent recovered fibre. This increases WestRock’s overall mix of virgin fibre from 65 to 67 per cent.