Smurfit plots £15bn merger with US rival, another blow to London stock market

The London stock market took another hit when Smurfit Kappa announced plans to merge with a US rival.

The Dublin-headquartered FTSE 100 packaging giant is in “advanced talks” with Georgia-based WestRock over a £15bn mega deal.

The combined company, which will be called Smurfit WestRock, would be listed on the New York Stock Exchange – canceling Smurfit’s London listing, which it has held since 2016.

This move marks another setback for London as companies move out of the city to the US.

CRH, the world’s largest building materials group and another Irish corporate giant, is moving its stock exchange listing from London to the US this month.

And London missed out on the hottest IPO of the year, with chip designer Arm leaving his home country for New York.

Should the deal go through, Smurfit WestRock would retain a secondary listing in London and continue to be led by Tony Smurfit, who has been CEO since 2015.

Markets analyst Neil Wilson said: “Britain used to be where companies came to consolidate.

‘For many years it was the fusion capital of the world. That reputation has been lost.

“The London stock exchange urgently needs to see what it can do to stop the rot.”

Packaging companies have been in high demand since the pandemic as people stayed home and got used to ordering items such as food and clothing to be delivered to their homes.

The emergence of internet giants such as Amazon has also given the sector a boost.

Smurfit traces its roots to 1930s Dublin when businessman Jefferson Smurfit was asked to revive a small manufacturing company owned by family members.

Jefferson Smurfit grew under the leadership of the founder’s son, Sir Michael Smurfit, who became CEO in 1977 and made acquisitions in the US, Latin America and Europe.

Smurfit has been a driving force behind Irish business for decades, long before the domestic economy took off in the 1990s.

It merged with Kappa Packaging in 2005 and changed its name to Smurfit Kappa.

WestRock, the second largest packaging company in the US after International Paper, was founded in 2015 through the merger of Meadwestvaco and Rocktenn.

International Paper tried to buy Smurfit Kappa for £8bn in 2018 but was turned down.

Smurfit Kappa said the new deal would create the world’s ‘go-to’ supplier with an annual turnover of £27 billion and 100,000 employees in 42 markets.

Its headquarters would be in Dublin, with a US base in Georgia. The deal would provide “complementary portfolios with unique product diversity and innovative sustainability capabilities,” the company said.

Smurfit Kappa shares fell 3.8 percent, or 122p, to 3096p.