Merrion Capital is recommending Jefferson Smurfit as a buy at €2.03 a share on the basis of a future merger between Smurfit Stone and the Smurfit group. The brokers says there is no indication that such a deal is imminent but it argues there is a good strategic logic for both companies to contemplate such a move in the near term and could offer investors a means to realise value.

Smurfit's share price continues to trade at relatively weak levels and is now at a discount to its US peers and its own book value. A merger with Smurfit Stone would facilitate a recognition of the value in the group.

Merrion suggests a deal at parity valuation would imply a share price of €3.33 for the Smurfit group, 64 per cent higher than the current level.