WestRock (WRK) Buys Plymouth Packaging to Expand Portfolio
WestRock Company WRK has completed the acquisition of substantially all of the assets of Plymouth Packaging, Inc. — a corrugated packaging company. The acquisition will help WestRock penetrate into the growing on-demand corrugated packaging market.
Based in Plymouth, MI, Plymouth Packaging derives approximately 70% of sales from its Box on Demand systems and corrugated fanfold, and 30% from traditional corrugated box packaging. It currently supplies more than 100 customers with proprietary Box on Demand machines, manufactured by Panotec.
Last month, WestRock entered into an agreement to buy Plymouth Packaging’s equity interest in Panotec, and Plymouth Packaging’s exclusive right to distribute Panotec’s equipment in the United States and Canada.
Notably, the addition of Plymouth Packaging’s Box on Demand system will enhance WestRock’s differentiation in e-commerce and other custom applications, where on-site box making is required. The acquisition will also fortify the company’s automated packaging systems business.
The acquisition will reinforce WestRock’s differentiated packaging and packaging machinery strategies. Moreover, WestRock intends to fully integrate nearly 60,000 tons of containerboard used annually by Plymouth and anticipates additional containerboard integration opportunities.
In a bid to tap the growing demand for corrugated packaging, WestRock bought the assets of Island Container Corp. and Combined Container Industries LLC — two independent producers of corrugated boxes, sheets and point-of-purchase displays — in July 2017. Through these deals, WestRock added more than 80,000 tons of containerboard into its corrugated packaging business.
In sync with this, in early June, WestRock purchased five corrugated converting facilities in Ohio, Pennsylvania, and Louisiana from U.S. Corrugated — a large independent manufacturer of corrugated products for packaging and displays. The acquisitions will create significant opportunities for meaningful synergies and performance improvements for WestRock.
WestRock has outperformed the industry with respect to price performance over the past year. The stock has gained more than 30%, while the industry has recorded growth of 21.9% during the same time frame.
Zacks Rank & Key Picks
WestRock currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include DS Smith Plc DITHF, Domtar Corporation UFS and Neenah, Inc. NP. All three stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
DS Smith has a long-term earnings growth rate of 8%. Its shares have rallied 31.1%, over the past six months.
Domtar Corporation has a long-term earnings growth rate of 5%. The company’s shares have been up 34.6% during the same time frame.
Neenah has a long-term earnings growth rate of 5%. Shares of the company have appreciated 16% during the same time period.
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