Analysis: Smurfit management will be in charge of Europe's biggest paper company, writes Jane O'Sullivan
The biggest merger in Irish corporate history, the deal between Jefferson Smurfit Group and Kappa Packaging, leaves the Irish company's management firmly in charge.
JSG executives will occupy four of the top five positions in the enlarged company, including the key roles of chief executive, chief financial officer and chief operating officer.
Despite speculation that he might choose to step back, 69-year-old Dr Michael Smurfit will become chairman of Smurfit Kappa as the family name retains a prominent place above the door of the new company.
He will also receive a 4.5 per cent stake in the new company, in return for his 7.7 per cent shareholding in JSG.Smurfit's son, Tony, will assume the roles of president and chief operating officer, while JSG chief executive Gary McGann will hold the same role in the new company.
Its chief financial officer, Ian Curley, also comes from JSG.
McGann and his management team owned 2.3 per cent of Smurfit, a stake that will translate into a 1.3 per cent shareholding in the larger company.
Only the merged entity's deputy chairman, Kappa chief executive Frits Beurskens, hails from the Dutch side. No decision has yet been taken on where the company's new headquarters will be located.
The latest episode in the history of the Jefferson Smurfit Group only serves to highlight how far the group has come from its foundation more than 70 years ago as a small box maker in Walkinstown.
After the merger, Smurfit Kappa will be the dominant player in its sector in Europe with annual sales of more than €7.6 billion. The combined entity will employ close to 43,000 people across 23 countries in Europe and a further nine in Latin America.
It will be the world leader in corrugated paper, with the capacity to produce 5.1 million tonnes annually.
It will dominate the European market in containerboard, with the capacity to produce 6.1 million tonnes a year.
Yesterday's announcement is also seen as bringing closer an eventual return to the stock market by the enlarged group, especially as the merger will help in reducing overcapacity that has been one of the biggest challenges facing the industry.
While analysts said that Smurfit Kappa's private equity owners will want to wait for an improvement in the current industry cycle while also taking time to bed down the merger, the deal is seen as paving the way for a possible flotation. "The combined entity is much more attractive as a potential flotation candidate than either company would have been individually," Merrion analyst John Mattimoe said.
