Blog Exposure - WestRock Fortifies its Market Position with Acquisition of KapStone
Stock Monitor: KapStone Paper and Packaging Post Earnings Reporting
LONDON, UK / ACCESSWIRE / January 31, 2018 / Active-Investors.com has just released a free research report on WestRock Co. (NYSE: WRK). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=WRK as the Company's latest news hit the wire. On January 29, 2018, the Company announced the acquisition of KapStone Paper and Packaging Corp. (NYSE: KS). The deal has a total enterprise value of approximately $4.9 billion including approximately $1.36 billion debt. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, WestRock and KapStone Paper and Packaging most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:
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Details of the Transaction
As per the agreement signed by WestRock and KapStone, WestRock will acquire all the outstanding KapStone's shares at $35 per share. The offer price is at a 32% premium of KapStone's closing price of $26.54 on Friday, January 26, 2018, the last trading day before the deal was announced. Additionally, WestRock will assume KapStone's net debt valued approximately $1.36 billion. KapStone's shareholders can opt to receive $35 per share either in cash or 0.4981 WestRock's shares for each KapStone's share. WestRock has capped the limit of its equity to 25% for exchange against KapStone's shares, however there is no ceiling for getting cash consideration for the KapStone's shares.
Roger Stone, Chairman and Matt Kaplan, President and CEO of KapStone, have signed voting agreements and have agreed to vote in favor of the transaction.
The transaction is expected to be completed in Q3 2018 ending on September 30, 2018 and is subject to regulatory and shareholders' approvals and other closing conditions.
WestRock plans to fund the cash portion of the deal via new debt and plans to refinance KapStone's assumed debts at the close of the deal. The deal is not conditional on financing.
After the close of the deal, KapStone's operations will be absorbed into WestRock's Corrugated Packaging division.
Advantages for WestRock
The deal is expected to be accretive to WestRock's adjusted earnings and cash flow immediately on closing of the deal. The deal is expected to result in approximately $200 million in annual cost synergies and performance improvements by end of fiscal 2021. The deal allows WestRock to increase supply of corrugated packaging to Victory Packaging and accelerates its plans to improve margins of its North American corrugated packaging business. KapStone's existing facilities in West Coast will add to WestRock's ability to serve customers in this region and at the same time reduce costs across its supply chain. The deal allows WestRock to sell its existing products to an expanded customer base. WestRock will be able to expand its product portfolio with the inclusion of KapStone's complementary specialty kraft paper offerings. WestRock will be able to increase its portfolio of virgin fiber-based paper from 65% to 67% as 78% of KapStone's paper is made of virgin fiber as only 22% paper is made from recovered fiber.
Management Comments
Commenting on the acquisition of KapStone, Steve Voorhees, CEO of WestRock, said:
"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."
Matt Kaplan, President and CEO of KapStone, added:
"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. The transaction enables us to deliver an immediate and compelling cash premium to our shareholders."
About KapStone Paper and Packaging Corp.
Northbrook, Illinois-based KapStone was formed in April 2005 and is a leading North American producer and distributor of unbleached Kraft paper and corrugated packaging products. Its wide range of products include containerboard, corrugated products, and specialty papers, including liner and medium containerboard, kraft papers and saturating kraft. KapStone owns Victory Packaging and specializes in providing unique solutions for its clients via 65 distribution centers across US, Canada, and Mexico. KapStone has four paper mills, 22 converting plants, and more than 65 warehouses and distribution centers located across North America. It is supported by a team of 6,200 people.
KapStone's annual revenues exceed $3 billion, and its preliminary, unaudited adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) for Q4 2017 was around $130 million to $135 million.
About WestRock Co.
Atlanta, Georgia-based WestRock is a leading corrugated packaging Company that provides an unbeatable portfolio of paper and packaging products. It's packaging products and solutions include Containerboard, Corrugated Containers, Displays, Folding Cartons, Kraft Paper, Paperboard, Partitions and Protective Packaging, etc.
The Company has more than 300 manufacturing facilities, design centers, research labs, and sales offices worldwide. WestRock has an employee strength of over 45,000 people.
Stock Performance Snapshot
January 30, 2018 - At Tuesday's closing bell, WestRock's stock marginally declined 0.37%, ending the trading session at $68.16.
Volume traded for the day: 3.73 million shares, which was above the 3-month average volume of 1.64 million shares.
Stock performance in the last month – up 7.85%; previous three-month period – up 12.05%; past twelve-month period – up 26.79%; and year-to-date - up 7.83%
After yesterday's close, WestRock's market cap was at $17.33 billion.
Price to Earnings (P/E) ratio was at 24.62.
The stock has a dividend yield of 2.52%.
The stock is part of the Consumer Goods sector, categorized under the Packaging & Containers industry.
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