Shares of KapStone Paper and Packaging Corporation (NYSE:KS), a producer of containerboard, corrugated products, and specialty paper, are up 11% as of 3:25 p.m. EDT Tuesday after the U.S. Department of Justice cleared WestRock's (NYSE:WRK) pending acquisition of KapStone through Whiskey Holdco, Inc.
The U.S. Department of Justice's approval was the last antitrust approval required to complete the move. WestRock manufacturers corrugated packaging such as folding cartons and paper board, and it's the largest North American producer of solid bleached sulfate and second-largest producer of containerboard. Holdco will be the overall parent of WestRock and KapStone. If the deal closes as predicted, KapStone shareholders have the right to take $35 per share in cash, or 0.4981 shares of Holdco common stock and cash in lieu of fractional shares.
The acquisition offers investors synergies to be created between the two, and it also brings in KapStone's assets that complement WestRock's own. Further, after roughly a decade of consolidation in the corrugated packaging industry, this move will help support more sustainable, and higher, margins. "We love the deal. We think WestRock's management is terrific. We think the stock goes up quickly, and materially, once the "real" story is better understood," WestRock shareholder Barnes Hauptfuhrer, also head of the hedge fund Chapter IV Investors, told Forbes via email.