Package Deal

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What's going on?

Two of the worlds biggest packaging companies are weighing up a merger.

What does this mean?

Cardboard boxes might not be exciting, but packaging is actually big business. After all, almost everything we buy, from e-commerce products to our favorite beers, comes bundled in some form of package or box. And now US-based WestRock and Irelands Smurfit Kappa, titans in the space, are discussing a potential union with a combined value of $20 billion. That hefts not the only boon: WestRock reckons the deal could lead to serious savings, pocketing over $400 million in the first year alone. Little wonder, then, that the firms are excited about the prospect, which would bring their 500-plus operations together to form the worlds premier packaging provider.

Why should I care?

For markets: Boxing clever.
Each firm currently commands about 20% of the market share for one hot commodity: the standard brown boxes used by retailers and e-commerce platforms. So when these giants talk of merging, its bound to send ripples across the industry if competition regulators dont object, that is. And this could be a well-timed move: for one, analysts predict a resurgence in demand next year. And for another, the ongoing global shift from plastic to more sustainable paper-based packaging a niche these companies excel in means theyre set for a sizable boost.

The bigger picture: Londons burning.
If the deal does go ahead, it would spell more woe for the UK stock market. The tie-ups set to see Smurfit Kappa cancel its premium listing on the LSE, and it wouldnt be the first to bid Britain bye-bye: just this month CRH is due to switch to the US from London, and mining giant BHP skedaddled last year too. Its not hard to see why: the British economy is flailing right now, while valuations on the UK stock market arent exactly sitting pretty.

Originally posted as part of the Finimize daily email.

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