In line with constant strategic focus on its core paper and packaging solutions businesses, WestRock CompanyWRK has completed the previously announced sale of its Home, Health and Beauty business to Silgan Holdings Inc. SLGN . The net after-tax proceeds from the divestiture of approximately $1 billion will be utilized to fund the previously declared purchase of Multi Packaging Solutions International Limited.
On Jan 23, 2017 the company had announced that it has entered into an agreement with Silgan under which the latter will buy its Home, Health and Beauty business for approximately $1.025 billion in cash plus the assumption of approximately $25 million in foreign pension liabilities.
On Jan 24, 2017, WestRock announced that it will acquire Multi Packaging Solutions International Limited for $18.00 per share in cash and the assumption of an estimated $873 million in net debt, for a total enterprise value of $2.28 billion. Multi Packaging Solutions is a leading global provider of print-based specialty packaging solutions. The acquisition will be immediately accretive to WestRock's results, both on an earnings per share basis and cash flow basis. The acquisition will strengthen the company's differentiated portfolio of paper and packaging solutions.
Westrock Company Price
WestRock's Home, Health and Beauty business designs and produces value added dispensing systems and closures for the global home care, lawn and garden, personal care, beauty, fragrance and healthcare markets. The business has 13 manufacturing plants in North America, Europe, South America and Asia and generated sales of about $566 million in the 12-month period that ended Sept 30, 2016. It came under WestRock's Consumer Packaging Segment that accounted for 44.6%, 33.2% and 28.2% of total sales in fiscal 2016, 2015 and 2014 respectively.
The company has been divesting some non-core assets, such as its specialty chemicals business, which was spun off as an independent public company named Ingevity in May 2016. The spinoff will better position both businesses to pursue respective operating priorities and strategies.
Additionally, it is realizing the strategic benefits of the MeadWestvaco and Rock-Tenn merger, having already achieved an annual run rate of over $580 million in synergies and performance improvements. The company will also benefit from acquisitions, joint venture with Grupo Gondi as well as cost saving efforts.
WestRock has outperformed the Zacks categorized Paper and Related Products sub industry in the past one year. The company has gained 60.2%, while the industry witnessed an increase of 32.2%.
Zacks Rank & Key Picks
WestRock currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the sector include DS Smith Plc DITHF and Sappi Limited SPPJY . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
DS Smith has an estimated long-term earnings growth rate of 7% and Sappi Limited carries an estimated long-term earnings growth rate of 4.68%.
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