Jefferson Smurfit and Dutch group Kappa Packaging said yesterday all the necessary consultation and advisory processes involved in their merger were complete and an agreement to merge has been signed.
The transaction, which will create Smurfit Kappa, Europe's largest paper and packaging group, will close on or around December 1st.
"We are pleased to announce the achievement of these milestones," said Gary McGann, Jefferson Smurfit's chief executive. "Our objective now is the effective integration of the two businesses."
The European Commission earlier this month approved the merger, though it said the two companies needed to sell off 10 plants. Still, the disposals represent only a very small part of the combined company's operations, which number about 425 plants.
Under the terms of the deal Smurfit will take the dominant position in Smurfit Kappa. The enlarged group will be 58.3 per cent owned by the Irish company and its executives will occupy four of the top five positions.
Smurfit has also agreed to pay about €300 million in cash to Kappa's two private-equity shareholders, Cinven and CVC. This will be financed through a new credit facility, which will also refinance Smurfit's existing credit facility and Kappa's debt.
"The merger creates an exciting platform which combines two highly complementary businesses," said Frits Beurskens, chief executive of Kappa. "Smurfit Kappa will have a well invested asset base to provide creative packaging solutions to current and prospective customers."
The merger, which was first mooted in May, has been welcomed by analysts following a tough period for the industry as lacklustre growth in Europe combined with overcapacity to hit profitability.
