© Reuters. Activist investor urges Smurfit Kappa to reconsider WestRock deal
Shares of Smurfit Kappa (SMFTF) fell in early trading on Thursday after activist investor Primestone Capital raised concerns about the company's proposed acquisition of WestRock (NYSE:).
Primestone, which owns around 0.8% of the packaging company, has reservations about the deal and urged the company to consider alternative deals that could create more value for Smurfit Kappa shareholders.
Primestone asked Smurfit to revive merger talks with International Paper. “SKG's board rejected International Paper's friendly approach in 2018 on valuation grounds, but many parameters have changed since then and an attractive deal may now be possible,” Primestone said in a letter to Smurfit's board. Kappa.
“Today we believe SKG shares are materially undervalued, reflecting investor concerns over the proposed Westrock acquisition that shaved almost $2 billion off its market capitalization in just a few weeks,” they added.
Overall, Primestone believes the Westrock transaction “risks deteriorating SKG's business profile” by creating a higher-cost, less integrated business, while “increasing leverage to deliver modest financial benefits to SKG shareholders.” “.
Smurfit shares fell to 3,164 pence per share at the start of the session on Thursday, but have since recovered and are now up around 0.85% at 3,210 pence.