to acquire Smurfit-Stone
RockTenn and Smurfit-Stone Container Corporation
announced that the boards of directors of both companies have
approved a definitive agreement under which Smurfit-Stone will
become a wholly-owned subsidiary of RockTenn.
The aggregate consideration, consisting of 50 percent cash and
50 percent RockTenn stock, is valued at $35 per share of Smurfit-Stone
common stock, and represents a 27 percent premium to Smurfit-Stone’s
closing stock price on January 21, 2011. The aggregate equity
value of the transaction, based on the closing price of RockTenn’s
common stock on January 21, 2011, is approximately $3.5 billion.
This transaction, unanimously approved by the boards of directors
of both companies, will create a $9 billion leader in the North
American paperboard packaging market. Upon closing, RockTenn
will maintain its headquarters in Norcross, Georgia.
Smurfit-Stone has manufacturing mill capacity of 7.0 million
tons, and when combined, RockTenn will have 9.4 million tons
of total production capacity, including 7.5 million tons of mill
production in the attractive containerboard market.
Smurfit-Stone will become a wholly owned subsidiary of RockTenn.
For each share of Smurfit-Stone common stock, Smurfit-Stone stockholders
will be entitled to receive 0.30605 shares of RockTenn common
stock and $17.50 in cash, representing 50 percent cash and 50
percent stock. The aggregate consideration is $35 per Smurfit-Stone
common share. The consideration represents a 27 percent premium
to Smurfit-Stone’s closing stock price on January 21, 2011.
The aggregate purchase price being paid for Smurfit-Stone’s equity
in the transaction is approximately $3.5 billion, consisting
of approximately $1.8 billion of cash and the issuance of 30.9
million shares of RockTenn common stock. Following the acquisition,
RockTenn shareholders will own approximately 56 percent and Smurfit-Stone
shareholders will own 44 percent of the combined company.
In addition to the equity consideration, RockTenn will assume
Smurfit-Stone’s net debt and pension liabilities. As of December
31, 2010 Smurfit-Stone’s net debt was $0.7 billion and its pension
liabilities were $1.1 billion ($0.7 billion after-tax). RockTenn
has received $3.7 billion in committed bank financing from Wells
Fargo Bank N.A., Rabobank and SunTrust Bank to finance the cash
portion of the transaction, to refinance existing debt and to
provide liquidity for the combined operations.
The purchase price, including Smurfit-Stone’s net debt and after-tax
pension liability as of December 31, 2010, represents a multiple
of 6.1x Smurfit-Stone’s annualized adjusted EBITDA of $820 million
for the three months ended December 31, 2010.
The transaction is expected to close in the second calendar quarter
of 2011 and is subject to customary closing conditions, regulatory
approvals, as well as approval by both RockTenn and Smurfit-Stone