Three weeks ago, I wrote an online article detailing the changes that consolidation among ink manufacturers and ink industry suppliers is having on the ink industry in general.
With the announcement on January 23 that RockTenn is acquiring Smurfit-Stone Container Corporation, we can also see that the ink industry’s customers are also continuing to undergo consolidation, and that will further impact ink makers.
The particulars of the deal are interesting among themselves. RockTenn is a much smaller company than Smurfit-Stone: Smurfit-Stone has manufacturing mill capacity of 7 million tons, and when combined, the company announced that RockTenn will have 9.4 million tons of total production capacity, including 7.5 million tons of mill production in the containerboard market. Sales of the combined companies are $9 billion; the transaction is valued at $3.5 billion.
Smurfit-Stone had struggled in recent years, having emerged from bankruptcy last summer. Combined, the new company will be the second-largest producer of North American containerboard and coated recycled board, and it expands Rock-Tenn's geographic footprint to the Midwest and West Coast. This will also likely lead to some overcapacity being taken out of the market.
This moves follows by two years the completion of the acquisition of Altivity (itself a combination of Smurfit-Stone Container Corporation’s consumer packaging business and Field Container) by Graphic Packaging, forming another major producer of folding cartons, coated-recycled boxboard and specialty bag packaging.
We have seen numerous mergers in the publication and packaging printing industries in the last few years. On the publication and commercial side, the largest acquisition, of course, was Quad Graphics’ purchase of World Color, formerly Quebecor World. For ink manufacturers, the merger had a major impact, as CR/T, Quad Graphics’ in-house ink manufacturing operation, picked up some ink capacity and other contracts shifted. It is reasonable to guess that the ink industry will feel an impact from the RockTenn-Smurfit-Stone purchase as well.