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WestRock to Buy Multi Packaging Solutions for $1.39 Billion

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WestRock (Richmond, Va., USA) will buy Multi Packaging Solutions International (Nottingham, U.K.) for about $1.39 billion in equity. This is the latest deal in the industry as companies globally seek to consolidate to combat what is described as weakening demand.

WestRock's corrugated packaging is used in the industrial and consumer end markets, and the Multi Packaging deal will boost WestRock's exposure to the fast growing healthcare market as well as the spirits, confectionary, and cosmetics markets.

"(Multi Packaging) brings not only revenue, but businesses that do have some modest growth potential," CLSA Americas analyst Mark Connelly said.

The deal will also boost the presence of WestRock, the second largest U.S. packaging company behind International Paper, in Europe, where several firms including Dutch company Schoeller Allibert‎ are on the market.

" ... With low to negative growth in key markets like processed food, producers are moving beyond their core – and taking more risk in the process – to keep revenues moving higher," Connelly said.

The containerboard industry – which makes materials for corrugated packages used to pack food, paper, and a host of other household and consumer products – has not grown since it peaked in 1999, he estimated.

WestRock also said its first-quarter sales were largely unchanged year-over-year due to a fall in shipments for corrugated packages, its biggest business, in North America. The company, created in 2015 by the $16 billion merger of MeadWestvaco and Rock-Tenn, has entered and exited several investments over the past year to streamline its portfolio and focus on its core paper and packaging businesses.

WestRock said that including about $873 million of Multi Packaging's net debt it will assume, its offer had an enterprise value of $2.28 billion. WestRock plans to refinance the debt after the deal closes, expected in the third quarter.

 

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