Founded in 2005, KapStone produces and distributes containerboard, corrugated products and specialty papers, including liner and medium containerboard, kraft paper and saturating kraft. KapStone also owns Victory Packaging, a packaging distribution company with facilities in the United States, Canada and Mexico.
According to its website, KapStone operates four paper mills: two in South Carolina, one in North Carolina and the former Longview Fibre mill in Washington state, which it acquired in 2013.
“KapStone is a great fit with WestRock,” states Steve Voorhees, CEO of WestRock. “[Its] complementary corrugated packaging and distribution operations will enhance WestRock’s ability to serve customers across our system, particularly in the western United States, and the addition of [its] specialty kraft paper products that we do not make enhances our differentiated portfolio of paper and packaging solutions.”
The news release issued by WestRock also points to KapStone’s ability to consume virgin fiber feedstocks at a high percentage. The transaction “increases [the] mix of virgin fiber-based paper in WestRock’s paper portfolio,” the release states. “KapStone’s 3 million tons of paper is made using 78 percent virgin fiber and 22 percent recovered fiber. This increases WestRock’s overall mix of virgin fiber from 65 percent to 67 percent.”
The acquisition cost is valued by the two companies at approximately $4.9 billion, based on a $35-per-share purchase price and WestRock’s assumption of $1.36 billion in KapStone debt.
KapStone’s chairman, Roger Stone, and its president and CEO Matt Kaplan agreed to vote their shares in support of the transaction, “subject to certain limitations.”
“The agreement to combine with WestRock is a testament to the tremendous company we have built and the hard work and accomplishments of the KapStone team,” says Kaplan. “As we began to understand WestRock’s principles, we realized how closely aligned our cultures are. As a result, we believe strongly that this will be beneficial to both our employees and customers.”
The two companies indicate the acquisition will enable WestRock to supply additional corrugated packaging to Victory Packaging and will “accelerate WestRock’s plans to improve margins in its North American corrugated packaging business.”
As of late January 2018, the transaction remains subject to closing conditions that include a vote by KapStone’s shareholders. Pending those conditions being met, the transaction is expected to close by the end of September 2018.
Pre-merger, WestRock employs some 45,000 people at more than 300 operating and office locations in North America, South America, Europe, Asia and Australia. KapStone employs about 6,200 people at more than 90 locations in North America.