Smurfit Westrock Plc · NYSE:SW
Smurfit Westrock — Smurfit Kappa Group PLC/ADR — Merger or Acquisition (March 2018)
24 slides from Smurfit Westrock's merger presentation, Mar 26, 2018
Slide 1: Building a Premier Global Packaging Business
Building a Premier Global Packaging Business Revised Proposal to Acquire Smurfit Kappa I March 26, 2018
Slide 2: No offer or solicitation
No offer or solicitation This presentation is provided for informational purposes only and is not intended to and does not constitute an offer to subscribe for or purchase nor a solicitation of an offer to sell or the solicitation of any vote or approval in any jurisdiction in respect of, shares of
Slide 3: No profit forecast / asset valuations; Forward-looking statements
No profit forecast / asset valuations No statement in this presentation is intended to constitute a profit forecast for any period nor should any statements be interpreted to mean that profits and/or or earnings per share will necessarily be greater or lesser than those for the relevant preceding fi
Slide 4: Employee consultation; Important Additional Information
Employee consultation No potential options, proposals, analysis and costings in this presentation are, or should be deemed to be, an indication that any decision has been made to implement any course of action that could affect employees. No final decisions will be made until legally required employ
Slide 5: Revised Proposal to Acquire Smurfit Kappa
Revised Proposal to Acquire Smurfit Kappa Building a Premier Global Packaging Business Combines two highly complementary businesses with compelling strategic and financial rationale Identified run-rate, pre-tax operating synergies of at least $450 million by the end of the fourth year (see “Merger B
Slide 6: Aim Remains to Work Constructively Toward a Recommended Transaction
Aim Remains to Work Constructively Toward a Recommended Transaction A series of attempts to engage with Smurfit Kappa have been denied 14 February Initial approach to Smurfit Kappa CEO 20 February Smurfit Kappa refuses to engage stating it’s not in the interest of its Shareholders 23 February Meetin
Slide 7: Building a Premier Global Packaging Business
Building a Premier Global Packaging Business Combination is highly complementary and offers compelling strategic and financial rationale Global platform well positioned to capture growth in expanding containerboard and Improves access to attractive markets in corrugated packaging markets the most pr
Slide 8: Creating a Global Containerboard Leader
Creating a Global Containerboard Leader Combined system capacity of 19MM tonnes of kraftliner and recycled containerboard Europe Ilim JV 1MM Americas Kraftliner tonnes 30% kraftliner ~ Recycled ~40% IP Smurfit 5.0MM Kappa Tonnes Recycled ~70% IP 14.0MM Smurfit Tonnes Kappa Kraftliner ~60% ~185 Box P
Slide 9: Highly Complementary Facility Footprint
Highly Complementary Facility Footprint Well-positioned, competitive assets across Europe and the Americas Europe Americas IP SKG North America IP SKG Packaging Mills 2 19 Packaging Mills 18 4 Box Plants 163 25 Box Plants 26 158 Latin America IP SKG Packaging Mills 3 10 Box Plants 5 23 Note: Please
Slide 10: Significant Value Potential from Synergy Realization
Significant Value Potential from Synergy Realization Identified at least $450 million in run-rate, pre-tax operating synergies by end of fourth year1 SG&A / Other ~20% Sourcing & Supply Chain ~50% Operations Execution ~30% Potential for further revenue synergies2 Commercial Excellence Note: Estimate
Slide 11: Key Highlights of the Revised Proposal
Key Highlights of the Revised Proposal Revised Proposal is at a material premium to SKG all-time high €25.25 cash per each Smurfit Kappa ordinary share Terms 0.3028 new IP shares of common stock for each Smurfit Kappa ordinary share (as 2018)1 €39.71 per Smurfit Kappa share at 5 March Value 2 Headli
Slide 12: Firm Commitment to Financial Objectives and Value Creation
Firm Commitment to Financial Objectives and Value Creation Proposal aligns with International Paper’s disciplined approach to capital allocation  EPS accretive in the first full year  Free Cash Flow enhancement in the first full year ROIC > WACC by the third year  Continued alignment wit
Slide 13: Full Alignment with International Paper's Framework for Value Creation
Full Alignment with International Paper’s Framework for Value Creation Disciplined approach to acquisitions with clearly defined strategic and financial objectives Fiber-based Packaging, Pulp and Paper Advantaged Positions Attractive Markets Shareholder Value Low cost, competitive assets Good market
Slide 14: Appendix
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Slide 15: Well Positioned in the Most Attractive Global Regions
Well Positioned in the Most Attractive Global Regions Americas and Europe represent ~60% of global volume and ~70% of global profitability Global Containerboard Global Corrugated Packaging Regional Real GDP Growth % Consumption (MM tonnes) Profitability ($B) Rest of World Rest of World 56 ~$8B 2.9%
Slide 16: Combination Strengthens Premier Position in Europe
Combination Strengthens Premier Position in Europe Combined business strongly positioned for profitable growth Europe is the second largest corrugated packaging market globally and projected to grow ~3% Corrugated industry is consolidating while still somewhat fragmented as compared to North America
Slide 17: Leading Pan-regional Supplier of Corrugated Latin America
Leading Pan-regional Supplier of Corrugated Latin America Combination increases exposure to the best markets in Latin America Sizeable and populous region Regional corrugated consumption of ~13 million tonnes Growth prospects across region are >3% International Paper Position Smurfit Kappa Position
Slide 18: Combined Business Positioned for Profitable Growth
Combined Business Positioned for Profitable Growth Combination enhances capability for differentiated and innovative value propositions Secular Growth Drivers E-commerce / Distribution E-commerce as key retail channel Consumer consumption trends, preferences & convenience Corrugated as sustainable s
Slide 19: Proven Track Record of Successful Integration
Proven Track Record of Successful Integration Exceeded synergy commitments, more and faster, in prior transactions Weyerhaeuser Temple Inland Weyerhaeuser Cellulose Fibers (2016) Smurfit Kappa Packaging (2008) Packaging (2012) 15% of sales 12% of sales End of 9% 10% of sales Year 1 of sales 4 Years
Slide 20: Proven Track Record of Deleveraging
Proven Track Record of Deleveraging Rapid deleveraging post completion in prior transactions 2008 -2010 2012-2013 2016-2017 WY Packaging TIN Packaging WY Pulp 5.5 2.2 5.0 $2.0 2.1 2.0 4.5 1.8 1.8 1.9 $ B 1.7 1.7 $1.5 1.7 1.6 4.0 (x) Flow 3.5 Cash $1.0 3.0 Free 0.6 2.5 Leverage $0.5 2.0 1.5 $0.0 1.0
Slide 21: Investor Relations Contacts
Investor Relations Contacts Guillermo Gutierrez +1-901-419-1731 Michele Vargas +1-901-419-7287 Media Contact Tom Ryan +1-901-419-4333
Slide 22: Annex Slide
Annex Slide 8 The statement that the combined business would be a leading producer of 19 million tonnes of kraftliner and recycled containerboard in the Americas and Europe is based on a combination of: a. Smurfit Kappa’s production disclosed in Smurfit Kappa’s Annual Report 2016 (pages 22-23 for Eu
Slide 23: Annex Appendix Slide (continued)
Annex Appendix Slide 15 (continued) Chart (Middle) a. Global Corrugated Packaging Profitability chart is based on apparent consumption of containerboard extracted from the same reports above. Apparent consumption was then adjusted for imports/exports. b. Proxies for EBITDA margins derived from the p
Slide 24: Annex Appendix Slide
Annex Appendix Slide 16 The European Containerboard Supply Positions 2017E were extracted from FEFCO and supplemental IP intelligence. For 2017E, adjustments were made for IP FY17 actual and SAICA acquisition of Emin Leydier Level of integration for Europe was obtained from FEFCO, RISI European Pape
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