RockTenn to Acquire Smurfit-Stone for $3.5 Billion

RockTenn, Norcross, Ga., USA, and Smurfit-Stone Container Corp., Chicago, Ill., earlier this week (Sunday, January 23) approved a definitive agreement under which Smurfit-Stone will become a wholly owned subsidiary of RockTenn. The aggregate consideration, consisting of 50% cash and 50% RockTenn stock, is valued at $35 per-share of Smurfit-Stone common stock, and represents a 27% premium to Smurfit-Stone's closing stock price on January 21. The aggregate equity value of the transaction, based on the closing price of RockTenn's common stock, is approximately $3.5 billion.

This strategic 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.

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 containerboard market.

RockTenn's Chairman and CEO, James A. Rubright, said that "RockTenn's acquisition of Smurfit-Stone is another major step in our transformation of RockTenn to be the most respected company in our business with a laser focus on exceeding our customers' expectations and creating long term shareholder value. The containerboard and corrugated packaging industry is a very good business and U.S. virgin containerboard is a highly strategic global asset. With this acquisition, RockTenn's fiber input ratio will be 55% virgin and 45% recycled. We believe this transaction provides the greatest possible career opportunities for our co-workers from both companies."

Smurfit-Stone's CEO Patrick J. Moore added that "the Smurfit-Stone management team and the board of directors are sharply focused on creating value for shareholders. This transaction immediately achieves this objective, creating a stronger combined company that is well positioned to deliver long-term value to shareholders and high-quality, innovative packaging solutions to its valued customers."

Combined, RockTenn and Smurfit-Stone will be the No. 2 producer of North American containerboard and the No. 2 producer of coated recycled board. It will have a management team with a strong record of shareholder value creation and excellent record of integrating acquisitions. The combined operations will have a balanced fiber input mix with 55% virgin fiber and 45% recycled fiber. The merger-acquisition expands RockTenn's geographic footprint to the U.S. Midwest and West Coast.

The transaction is expected to close in the second calendar quarter,and is subject to customary closing conditions, regulatory approvals, and approval by both RockTenn and Smurfit-Stone stockholders.

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