YOUR BUSINESS AUTHORITY
Springfield, MO
by Karen E. Culp
SBJ Staff
Jefferson Smurfit Corporation and Stone Container Corporation announced plans to merge the two companies May 10. Both companies have a presence in Springfield and both are manufacturers of paperboard and paper-based packaging products.
The combined company will be called Smurfit-Stone Container Corporation and is expected to have annual sales of $8 billion.
The deal, which has been approved by both companies' boards of directors, is also subject to shareholder approval and regulatory consents.
Sheila Collins, general manager at Stone Container's Springfield plant, said she is not sure what the merger will mean to the local facility.
"Our plant here is in a great position. We don't directly compete with the Jefferson Smurfit plant in town, and we've been a very successful plant. We make money for the company, and we're very well regarded within the corporation," Collins said.
The Stone Container plant in Springfield employs 177, Collins said. The Jefferson Smurfit plant employs about 50 people, said Daniel J. Burger of the local plant. Both Collins and Burger said they could envision the company running the two locations as sister plants in Springfield.
"There will be some consolidation at some point. We have two corporate staffs right now, for example," Collins said.
Both Collins and Burger are waiting to see how the merger unfolds, but both said they think the industry is one that is ready for consolidation to begin. Prior to the merger, Stone was the largest such company of its type in terms of market share, yet garnered only 12 percent of the market, Collins said.
In most other industries, the top company holds a much larger percentage of the market. The merged company could gain as much as 20 percent of the national market, making it well above the other companies in the business in size.
A local company also in the paperboard business is Southern Missouri Container. The 26-year-old, employee-owned local company will probably not be affected by the merger since it is already concentrating on serving smaller customers.
"If you try to compete with the big companies in this business, it can be very difficult. We have tried to develop our own market," said Chuck Bacchus, one of the company's owners.
One company holding a large share of the paperboard industry's market is significant, but probably more significant is the fact that the merger will allow the two companies to survive, Bacchus said.
"This will be good for both those companies. Both of them have been facing somewhat of a struggle, and this will ensure that they continue and will place them in a much better position," Bacchus said.
Though Springfield has two plants, some markets have four, five or six plants, Collins said.
Both the Stone and Jefferson Smurfit facilities are somewhat independent. The Stone structure is "very decentralized," Collins said, and the Springfield operation has its own sales team and service area.
Stone serves an area that is within about a three-hour radius of Springfield, Collins said. Stone has been in Springfield since 1986.
The Jefferson Smurfit site serves an area that expands into southeast Kansas and as far north as Kansas City, Burger said. The company has been in Springfield since 1959.
The combined corporation will also be a world leader in paper products, having an 11 percent share of global container-board sales, according to information released from the companies.
Approximately 64 percent of the combined company's production capacity will be in the United States, while 30 percent will be in Europe and 6 percent in Latin America.
Dr. Michael W.J. Smurfit, chairman of Jefferson Smurfit, will become non-executive chairman of Smurfit-Stone. Roger W. Stone, chairman, president and chief executive officer of Stone, will be president and chief executive office of Smurfit-Stone.
The corporate headquarters of Smurfit-Stone will be in Chicago. Stone Container's headquarters is now in Chicago while Jefferson Smurfit's is now in Clayton, near St. Louis. What will happen to those offices is not clear, Burger said.
"No one has really said what will happen to the Clayton offices. It is possible they could be used for some corporate application," Burger said.
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