Westrock stock rises on proposed merger with Smurfit

Westrock (WRK) shares are on the rise after the company said it is in talks with Smurfit Kappa Group (SKG.L) to merge in a deal valued at $20 billion. Yahoo Finance Live's Brad Smith and Julie Hyman break down the report and the potential benefits of the merger.

Video Transcript

- Shares of WestRock, WestRock, WestRock, yes, they are jumping today after the company said it's in talks with Smurfit Kappa group to merge in a deal worth about $20 billion. The combination would result in a packaging giant called Smurfit WestRock. When you put this in our group Slack this morning, I had to look up Smurfit. I didn't know if you were just like serving up a Merriam-Webster's word to us that I did not know.

This is indeed a deal that looks like it may go through here.

- Yeah. The companies themselves have, after some initial reporting, the companies themselves acknowledged that they were in talks here. So we're talking about packaging, basically, for all kinds of stuff, all different kinds of packaging. The issue is, in this environment, we've seen a drop in demand for packaging because we've seen somewhat of a drop in demand for goods. So that's why, potentially, you would have some benefit to teaming up.

Although Jefferies this morning out with a note and saying there are maybe some limited synergies and advantages from this kind of a deal. Jefferies saying rival International Paper has shown maybe there aren't as many synergies as you would anticipate. So WestRock shares are trading higher. I believe Smurfit Kappa shares had been taking a hit. It is a UK based company, so the shares have been falling in European trading, but, you know, obviously $20 billion deal, if it goes through, would be a big one.

So we'll have to keep an eye and see if it gets done.

- Well, especially at a time where many people who are tracking their packages one way or another, or for the broader push towards more sustainable packaging if combining these two entities would make it so that we did have more of those targets actually being hit, and perhaps, there is some kind of consolidated effort that they can earmark or put towards that. That is perhaps where we would see this packaging giant make sense for just streamlining a lot of those operations