Canadian Packaging

RockTenn to acquire Smurfit-Stone Containers Corp.


January 24, 2011
by Canadian Packaging Staff

RockTenn Co. (Norcross, GA), a manufacturer of paperboard, containerboard and consumer and corrugated packaging, is acquiring Smurfit-Stone Container Corp. (Chicago, IL), in a deal valued at US$3.5 billion.

The acquisition—approved by the boards of directors of both companies—will create a $9 billion leader in the North American paperboard packaging market. Upon closing, RockTenn will maintain its headquarters in Norcross, GA.

Smurfit-Stone is one of the industry’s leading integrated containerboard and corrugated packaging producers and one of the world’s largest paper recyclers. The company has manufacturing mill capacity of 7.0 million tons.

The acquisition will give RockTenn 9.4 million tons of total production capacity, including 7.5 million tons of mill production in the lucrative containerboard market, according to the company.

RockTenn’s chairman and chief executive officer, James Rubright said, “The containerboard and corrugated packaging industry is a very good business and U.S. virgin containerboard is a highly strategic global asset. With this acquisition, RockTenn’s fiber input ratio will be 55 percent virgin and 45 percent recycled. We believe this transaction provides the greatest possible career opportunities for our co-workers from both companies.”

Smurfit-Stone’s chief executive officer Patrick Moore said, “The Smurfit-Stone management team and the board of directors are sharply focused on creating value for shareholders. This transaction immediately achieves this objective, creating a stronger combined company that is well positioned to deliver long-term value to shareholders and high-quality, innovative packaging solutions to its valued customers.”

According to RockTenn, the combined companies will create:

  • the #2 producer of North American containerboard;
  • the #2 producer of coated recycled board;
  • A balanced fiber input mix with 55 percent virgin fiber and 45 percent recycled fiber;

It also expands RockTenn’s geographic footprint to the midwest and west coast, and brings opportunity to benefit from approximately $500 million of NOL (net operating loss) at Smurfit-Stone.

As part of the terms, RockTenn will assume Smurfit-Stone’s net debt and pension liabilities. As of December 2010, Smurfit-Stone’s net debt was $0.7 billion and its pension liabilities were $1.1 billion before tax.

RockTenn reports annual net sales of $3.0 billion.