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Wednesday, February 21, 2024
Feb. 21, 2024

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Longview paper mill owner WestRock, Irish company to form packaging giant

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LONGVIEW — The owner of a Longview paper mill — doubling its local footprint with the anticipated opening of a new plant — is merging with an Ireland-based leader to form what the companies call the largest listed packaging company in the world.

Atlanta-based WestRock plans to merge with Smurfit Kappa this spring to form a multibillion-dollar publicly traded sustainable packaging company with hundreds of operations, including 67 mills, across the globe. The deal, brokered in September, will make the new company Smurfit WestRock the largest listed global partner by revenue, according to the announcement.

The companies report their combined last 12 months’ adjusted annual revenue was $34 billion as of the end of June.

The Longview WestRock mill, located east of the Lewis and Clark Bridge and on the Columbia River, was previously owned by KapStone Paper & Packaging, and Longview Fibre Paper and Packaging before that.

The Longview mill makes carboard materials: containerboard and corrugated containers. It’s new 410,000-square-foot-corragated box plant broke ground in March.

Cowlitz County Economic Development Council President Ted Sprague said Smurfit Kappa wanted a Northwest presence and likely saw the strength in Longview’s site thanks to its recent expansion. He said he does not foresee the merger affecting the number of Longview WestRock workers, which the company said included hundreds as of early 2022.

Industry outlooks

Demand for corrugated packaging products boomed during the start of COVID as more customers purchased items online rather than in-person. In 2022, an E-commerce packaging report by market researcher Smithers estimated the industry would be worth $101.7 billion in 2027, up from $34.7 billion in 2019. The report states corrugated board manufactures — like the Longview WestRock mill — are the main beneficiaries of the growth, holding 28% of the market share in 2022.

However, 2023 hasn’t been as profitable. Fastmarkets, a forest products price reporting agency, states North American pulp and paper companies’ profit margins dipped to 4.2% in the first quarter of 2023, compared to reaching 10% in the first quarter of 2022.

WestRock has seen similar declines. The company reports a 68% decrease in net sales year-over-year at the end of its fiscal year in September 2023, but also announced a 10% dividend increase for shareholders in October.

The company also closed its Tacoma paper mill in September, letting go roughly 400 employees, as well as a South Carolina mill in August.

WestRock is an S&P 500 company with hundreds of locations in North America — including from Vancouver, B.C. through Portland — as well as in South America, Europe, Asia and Australia.

Smurfit Kappa is a Financial Times Stock Exchange 100 company that specializes in corrugated and containerboard. The company has 32 locations in the U.S. and Mexico, but it’s only West Coast location is in southern California. Smurfit Kappa also has hundreds of locations in South America, Europe and Africa.

The new company, Smurfit WestRock, will be sold on the New York Stock Exchange and on the London Stock Exchange, and Smurfit Kappa CEO and its board chairman will remain in their positions, the companies report.

The new company’s global headquarters will be in Dublin — Smurfit’s headquarters — and its American headquarters will be in Atlanta — WestRock’s headquarters.

As of September, Smurfit Kappa shareholders were expected to own about 50.4% of the new company and WestRock shareholders would own 49.6%, the companies report.

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