Smurfit plots £15bn merger with US rival in fresh blow for the London stock market

The London stock market was dealt a fresh blow as Smurfit Kappa announced plans to merge with an American rival.

The FTSE 100 packaging giant, which has its headquarters in Dublin, is in ‘advanced talks’ with Georgia-based WestRock about a mega-deal worth £15billion.

The combined company, to be named Smurfit WestRock, would be listed on the New York Stock Exchange – meaning the cancellation of Smurfit’s London listing, which it has held since 2016.

The move is another setback for London as companies retreat from the City to the US.

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

And London missed out on the hottest initial public offering of the year, with chip designer Arm shunning its homeland for New York instead.

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 chief executive since 2015.

Neil Wilson, an analyst at Markets, said: ‘The UK used to be where companies would come to consolidate.

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

‘The London stock exchange needs to urgently look at what it can do to stop the rot.’ 

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

The rise of internet giants such as Amazon has also boosted the sector.

Smurfit has its roots in 1930s Dublin, when businessman Jefferson Smurfit was asked to revive a small manufacturing business which was owned by family members.

Jefferson Smurfit grew under the leadership of the founder’s son, Sir Michael Smurfit, who became chief executive in 1977 and went about undertaking acquisitions in the US, Latin America and Europe.

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

It merged with Kappa Packaging in 2005, changing its name to Smurfit Kappa.

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

International Paper tried to buy Smurfit Kappa in 2018 for £8billion but was rejected.

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

Its headquarters would be in Dublin, with an American base in Georgia. The deal would offer ‘complementary portfolios with unique product diversity and innovative sustainability capabilities,’ the company. 

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