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Week of 11 September 2023: Smurfit and CCA Redux?

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It is being reported that Smurfit, of Dublin, Ireland, and WestRock, of Atlanta, Georgia, are in merger talks. These are interesting times indeed.

I recall in 1986 when Smurfit bought Container Corporation of America (CCA) with the help of Morgan Stanley. In fact, the combined company name included Morgan Stanley.

Long term, that merger did not end well. Later, there was an entity formed called Smurfit/Stone which made the mistake, in my opinion, of keeping two headquarters, one in suburban St. Louis, the other in Chicago. Roger Stone exited stage left, and after an appropriate non-compete period, formed KapStone.

WestRock ended up with all the pieces of the Smurfit/Stone and KapStone companies, picking some of them up in bankruptcy sales. Appropriate poor performing assets (liabilities?) were sloughed off as the years went by.

Now comes Smurfit again and WestRock again. There are preliminary indications, according to reports, of joint headquarters in Dublin and Atlanta. Nothing was said about Smurfit's Americas headquarters in Miami, surely it will move to Atlanta. But still, two headquarters? These players should have learned from past debacles that two headquarters only lead to power struggles.

Then, we come to what does this mean to the rest of the players? Europe should remain calm, not much to change there, except perhaps for Saica of Spain who has just started making an entrance in North America with a box plant in Hamilton, Ohio.

Another player who may be looking over their shoulder is Domtar, whose entrance into the containerboard market seems a bit late in this cycle, given current market conditions. This will all depend on what Domtar's Chinese owner wants to do. We could have a real worldwide battle here involving Europe, the US, and China.

As for the other US players, consolidation will be a good move and likely a commodity price stabilizer. If Smurfit and WestRock fumble the culture mixing, others in the US, especially, will profit from this move. It is something of a win-win for the major US players.

Overall, I think this is a good merger, again, if the players can get their top level personalities aligned. I don't think two headquarters will work, y'all tried that before.


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