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Smurfit and WestRock Combine to Create World’s Largest Packaging Group – Merger Arbitrage Mondays

  • September 18, 2023

Key Highlights

  • The merger of WestRock Company (WRK) and Smurfit Kappa (SMFTF) in a cash plus stock deal.
  • The acquisition of Hostess Brands, Inc. (TWNK) by The J. M. Smucker Company (SJM) in a $5.6 billion all cash deal.
  • World Wrestling Entertainment (WWE) and Endeavor Group Holdings (EDR) complete merger to create TKO Group Holdings (TKO).

WestRock Company (WRK) $36.53

On September 12, 2023, WestRock Company (WRK) and Smurfit Kappa (SMFTF), Europe’s biggest paper and packaging producer, signed a definitive transaction agreement to create Smurfit WestRock, a deal that is expected to create the world’s biggest packaging group with $34 billion (€31.7 billion) of annual revenues.

WestRock is the second largest integrated paper product manufacturer in North America. It operates primarily in two key segments within the paper industry. The first segment focuses on corrugated packaging, commonly recognized as cardboard. The second segment specializes in consumer packaging, encompassing paper packaging for items such as fast food, toothpaste, and beverages.

As outlined in the press release from WestRock detailing the merger with Smurfit Kappa, WestRock shareholders will receive one Smurfit Kappa unit for each WestRock unit they currently hold and $5 in cash per share. Based on the closing prices of both companies on September 11th, this results in a per-share value of $43.51 for WestRock. The deal represents a premium of 27.75% to WestRocks’s closing price on September 11, 2023.

Although WestRock shareholders appear to be relatively satisfied with this strategic move, market observers harbor limited optimism regarding the deal’s approval. Smurfit Kappa investors on the other hand, exhibit discontent, as evidenced by the 8.3% drop in the value of their units. A significant spread of 13.1% exists between WestRock’s current trading price and the price shareholders would receive if the merger were to conclude today.

WestRock Transaction Terms
Summary of transaction terms

International Paper (IP), the largest paper and packaging group in the United States, led a failed attempt in 2018 to take over Irish cardboard boxmaker Smurfit Kappa.

Upon the deal’s finalization, Smurfit WestRock will establish its corporate domicile in Ireland and secure a listing on the New York Stock Exchange (NYSE), alongside a standard listing on the London Stock Exchange (LSE).

The deal is expected to close in the second quarter of calendar year 2024 and will need the approval of a minimum of 75% of Smurfit Kappa shareholders and more than 50% of WestRock’s investors, in addition to regulatory clearance.

Merger Arbitrage activity increased last week with four new deals announced and two completed.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.

Merger Arbitrage

Deal Statistics:

Total Number of Deals Closed in 2023127
Total Number of Deals Not Completed in 202310
Total Number of Pending Deals
Cash Deals43
Stock Deals15
Stock & Cash Deals5
Special Conditions7
Total Number of Pending Deals70
Aggregate Deal Consideration$795.25 billion

New Merger Arbitrage Deals:

  1. The acquisition of Hostess Brands, Inc. (TWNK) by The J. M. Smucker Company (SJM) for a closing value of $5.6 billion in a cash plus stock deal. Under the terms of the agreement, J. M. Smucker will commence an exchange offer to acquire all outstanding shares of Hostess at a price of $34.25 per share of Hostess common stock, consisting of $30.00 of cash and .03002 of a share of J. M. Smucker’s common stock. We added TWNK as a potential deal to the Deals in the Works section on August 25, 2023, and the price after the news of the potential deal came out was $27.
  2. The acquisition of Avantax Inc. (AVTA) by Cetera Financial Group for $1.2 billion or $26 per share in cash.
  3. The merger of WestRock Company (WRK) and Smurfit Kappa (SMFTF) in a cash plus stock deal. Under the terms of the Agreement, for each share of common stock of WestRock, the common stockholders of WestRock will receive one new Smurfit WestRock share and $5.00 in cash. This represents a total consideration to WestRock stockholders equivalent to $43.51 per WestRock Share, based on the closing share price of Smurfit Kappa ordinary shares on 11 September 2023, being the last closing price prior to this announcement (and converted to U.S. Dollars using an exchange rate of 1.075x, being the exchange rate on 11 September 2023).
  4. The acquisition of PFSweb, Inc. (PFSW) by GXO Logistics, Inc. (GXO) for $168.81 million or $7.50 per share in cash.

Deal Updates:

  1. On July 18, 2023, the Board of Directors of Activision Blizzard (ATVIdeclared a cash dividend of $0.99 per share, payable on August 17, 2023, to shareholders of record at the close of business on August 2, 2023. Taking this into consideration, we have adjusted the closing price for this deal back down to $95.
  2. Fiesta Restaurant Group (FRGI) filed its notification and report form with the Antitrust Division and the FTC on August 16, 2023. The waiting period under the HSR Act is expected to expire on September 15, 2023.
  3. On September 11, 2023, Stratasys (SSYS) informed 3D Systems (DDD) that, despite 3D Systems’ good faith efforts to reach a negotiated transaction for the benefit of all shareholders, Stratasys’ board of directors continues to support the Desktop Metal (DM) merger as its preferred alternative and that the Stratasys board is not interested in any further discussions with or proposals from 3D Systems about a combination.
  4. On September 11, 2023, the board of directors of Magellan Midstream Partners (MMPdeclared a special cash distribution expected to equal 24.74 cents per unit payable on September 25 to unitholders of record at the close of business on September 21. The right to issue this special distribution was negotiated as part of the pending merger with ONEOK (OKE), providing MMP the option to pay up to $50 million, or 24.74 cents per unit based on the 202.1 million units currently outstanding, if the merger has not closed by September 14 and if MMP has generated sufficient free cash flow in excess of ordinary distributions since May 14, 2023.
  5. On September 11, 2023, Horizon Therapeutics (HZNP) and Amgen (AMGN) jointly acknowledged that the “End Date” under the Transaction Agreement has been extended to the Second Extended End Date, which is December 12, 2023.
  6. On September 12, 2023, Paratek Pharmaceuticals (PRTK) announced that independent proxy advisor Glass, Lewis & Co. has recommended that stockholders vote FOR the company’s previously announced definitive agreement to be acquired by Gurnet Point Capital and Novo Holdings A/S.
  7. September 15, 2023: The European Commission has set October 19 as a deadline to complete its initial review of Pfizer’s (PFE) planned acquisition of Seagen (SGEN).
  8. September 15, 2023: A director of Summit Financial Group (SMMFpurchased $343,222 worth of stock on September 14, 2023. Shares of the acquiring company, Burke & Herbert Financial Services (BHRB) were also purchased by multiple insiders last week, including the CEO.


  1. On September 11, 2023, Denbury (DENannounced the expiration of the waiting period under the HSR Act.
  2. On September 11, 2023, Reata Pharmaceuticals (RETA) announced the expiration of the waiting period under the HSR Act.
  3. September 14, 2023: New Relic (NEWR) and Francisco Partners made the filings required under the HSR Act on August 11, 2023, and the applicable waiting period under the HSR Act expired on September 11, 2023. New Relic also announced that the “go-shop” period concluded on September 13, 2023.
  4. September 14, 2023: Sculptor Capital Management (SCU) announced that the waiting period under the HSR Act expired on September 5, 2023. Sculptor Capital and Rithm Capital Corp. (RITM) also received written confirmation of the FCA (United Kingdom Financial Conduct Authority) Approval on August 23, 2023.
  5. On September 14, 2023, Radius Global Infrastructure (RADI) announced that it had received all regulator approvals under the applicable antitrust laws and foreign investment laws for its planned sale to private equity firm EQT. The deal is expected to be completed in the third quarter of 2023.
  6. On September 15, 2023, Liminal BioSciences (LMNL) announced that its shareholders have approved the previously announced plan of arrangement with Structured Alpha LP.


  1. On September 11, 2023, JetBlue Airways (JBLU) and Allegiant (ALGT) announced that the airlines have entered into a definitive agreement under which JetBlue will transfer to Allegiant all of the holdings of Spirit Airlines (SAVE) at Boston Logan International Airport and Newark Liberty International Airport.
  2. September 11, 2023: According to Bloomberg, Sculptor Capital Management (SCU) executives were accused in a lawsuit of engineering a proposed $639 million acquisition of the fund by rival Rithm Capital Corp. (RITM) in a way that is unfairly blocking a higher bid.
  3. September 11, 2023: According to Reuters, EU antitrust regulators have delayed their investigation into Amazon’s (AMZN) acquisition of iRobot (IRBT) as they wait for the companies to provide the requested information.
  4. September 12, 2023: According to Reuters, European Union antitrust regulators are asking Microsoft (MSFT) rivals and customers about the software giant’s remedy with the UK for its planned purchase of Activistion (ATVI).
  5. On September 14, 2023, Dr. Jonathan Milner, the founder and one of the largest investors in Abcam (ABCM) with ownership of 6.14%, announced his decision to vote against the proposed acquisition of Abcam by Danaher Corporation (DHR).

Shareholders Meeting Schedule

  1. Kaleyra (KLR) – September 28, 2023
  2. Sovos Brands (SOVO) – October 16, 2023
  3. Avid Technology (AVID) – November 2, 2023

Closed Deals:

  1. The merger of The Necessity Retail REIT (RTL) with Global Net Lease (GNL) was completed on September 12, 2023. It took 111 days for this deal to be completed.
  2. The merger of World Wrestling Entertainment (WWE) and Endeavor Group Holdings (EDR) was completed on September 12, 2023 to create TKO Group Holdings (TKO). It took 162 days for this deal to be completed.

Weekly Spread Changes:

The table below shows weekly spread changes between September 8, 2023, and September 15, 2023.

Company Quote
Last Week
Spread Change
IRBT35.08Amazon (AMZN)140.4147.52%42.39%5.13%All Cash
AAIC4.59Ellington Financial Inc. (EFC)13.445.97%1.13%4.84%All Stock
SMMF23.74Burke & Herbert Financial Services Corp. (BHRB)50.116.45%2.44%4.01%All Stock
ACER0.8546Zevra Therapeutics, Inc. (ZVRA)5.135-28.62%-31.84%3.22%Special Conditions
LBC8.59Washington Federal, Inc. (WAFD)26.382.97%0.76%2.21%All Stock
PACW8.31Banc of California, Inc. (BANC)12.750.79%4.08%-3.29%All Stock
ZYNE1.38Harmony Biosciences Holdings, Inc. (HRMY)37.565-19.57%-15.91%-3.66%Special Conditions
DM1.51Stratasys Ltd. (SSYS)12.380.84%5.64%-4.80%All Stock
PTRS7.8LINKBANCORP, Inc. (LNKB)6.69-1.37%3.94%-5.31%All Stock
SAVE16.46JetBlue Airways Corporation (JBLU)4.97588.34%98.59%-10.25%All Cash

Top 10 Merger Arbitrage Deals With The Largest Spreads:

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as “special situation” deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

SAVE07/28/2022JetBlue Airways Corporation (JBLU)$31.00$16.4606/30/202488.34%112.34%
IRBT08/05/2022Amazon (AMZN)$51.75$35.0802/05/202447.52%123.01%
ACI10/14/2022The Kroger Co. (KR)$27.25$23.5403/31/202415.76%29.35%
PNM10/21/2020Avangrid, Inc. (AGR)$50.30$43.7712/31/202314.92%51.86%
WRK09/12/2023Smurfit Kappa (SMFTF)$41.60$36.5306/30/202413.88%17.65%
SGEN03/13/2023Pfizer Inc. (PFE)$229.00$208.401/31/20249.88%26.53%
CPRI08/10/2023Tapestry, Inc. (TPR)$57.00$52.1906/30/20249.22%11.72%
NGMS05/14/2023Aristocrat Leisure Limited (ALL.AX)$29.50$27.2105/14/20248.42%12.80%
AMED06/26/2023UnitedHealth Group Incorporated (UNH)$101.00$93.71512/31/20237.77%27.02%
SQNS08/07/2023Renesas Electronics Corporation (N/A)$3.03$2.8203/31/20247.45%13.87%

Deals In The Works

One new potential Merger Arbitrage deal was added to the ‘Deals In The Works‘ section last week.

  1. On September 13, 2023, Navios Maritime Holdings (NM) announced that its board of directors received an unsolicited non-binding proposal from N Shipmanagement Acquisition to acquire all of the outstanding shares not already owned by NSC and its affiliates for $1.84 in cash per common share.


  1. On September 11, 2023, Stratasys (SSYS) rejected a revised offer from 3D Systems (DDD).
  2. On September 14, 2023, Nano Dimension (NNDM) announced that it opposes and intends to vote against Stratasys (SSYS) proposed merger with Desktop Metal (DM) at the Extraordinary General Meeting of Shareholders to be held on September 28, 2023.

SPAC Arbitrage

SPAC Business Combination

  1. On September 13, 2023, Inception Growth Acquisition Limited (IGTA) and AgileAlgo Holdings Limited entered into a definitive agreement for a business combination. Upon closing of the business combination, the combined company will be organized in the British Virgin Islands and renamed “Prodigy, Inc.” and expects to list its ordinary shares on Nasdaq under the ticker symbol “PRGY.”
  2. On September 13, 2023, Focus Impact Acquisition Corp. (FIAC) and DevvStream Holdings Inc. (OTC: DSTRFentered into a definitive Business Combination Agreement. Focus Impact will be renamed DevvStream Corp. and the securities of the combined company will be listed on the Nasdaq Stock Exchange, and the shares are expected to trade under the ticker symbol “DEVS”.
  3. On September 15, 2023, Sagaliam Acquisition Corp. (SAGAexecuted a binding business combination agreement for the purchase of Biogenysis, and Virogentics, operating subsidiaries of Enzolytics (OTC PK: ENZC).


  1. On September 13, 2023, First Light Acquisition Corp (FLAG) and Calidi Biotheraputics (CLDIannounced the completion of their business combination.


  1. On September 12, 2023, The Growth for Good Acquisition Corporation (GFGD) announced that the Agreement and Plan of Merger with Zero Nox, Inc. has been terminated and that the Company is ceasing its business combination efforts.

List of all pending Merger Arbitrage deals:

Disclaimer: I have long positions in Activision Blizzard (ATVI) and Spirit Airlines (SAVE). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.