SMFTF - Wall Street Breakfast Podcast: WestRock Jumps On Smurfit Kappa Merger

2023-09-12 06:47:05 ET

Summary

• Smurfit Kappa and WestRock are merging to create Smurfit WestRock, a $20B packaging company.
• JPMorgan CEO Jamie Dimon criticizes proposed higher capital requirements for banks, calling it "hugely disappointing.".
• National Amusements, parent company of Paramount, agrees to refinance debt with lenders.

Listen below or on the go on Apple Podcasts and Spotify

WestRock ( WRK ) jumps on Smurfit Kappa ( SMFTF ) merger to create $20B packaging giant. (00:28) JPMorgan ( JPM ) CEO Jamie Dimon slams Basel III endgame proposal. (01:34) Paramount ( PARA ) parent strikes deal with lenders to refinance debt - report. (02:31)

This is an abridged transcript of the podcast.

Smurfit Kappa and WestRock will combine to form Smurfit WestRock, creating what the companies call a “Go-To packaging partner of choice for customers, employees and shareholders.”

The merger creates a $20B company.

Smurfit Kappa is down 9% on the London Stock Exchange and on the NYSE WestRock is up 8% premarket.

Under the terms of agreement, WestRock common stockholders will receive one new Smurfit WestRock share and $5 in cash for each share of WestRock. This is equivalent to $43.51 per share.

Smurfit Kappa shareholders will receive one new share for each ordinary share in Smurfit Kappa.

Tony Smurfit, the CEO of Smurfit Kappa called the deal a defining moment in the global packaging industry. WestRock’s CEO said the deal presents a comprehensive offering of packaging solutions for customers.

The companies will host a joint conference call to discuss the transaction later this morning.

JPMorgan Chase (NYSE: JPM ) CEO Jamie Dimon has once again slammed U.S. regulators' proposal for higher capital requirements for banks, calling it "hugely disappointing" as it could force borrowers to pay more for loans and may curtail lending by banks.

Regulators in July had proposed to strengthen regulations by requiring large U.S. banks to set aside more capital, as part of the "Basel III endgame" reforms .

At a Barclays conference , Dimon said the proposal would push more banking activities into sectors that are less regulated. Also, he warned that higher capital requirements compared to international peers would be a "huge negative" over time, noting that JPMorgan ( JPM ) would be required to hold 30% more capital than a European bank.

Dimon had previously warned that the new rules would likely raise the cost of mortgage affordability and impact small businesses .

National Amusements, the Redstone family holding company and parent of Paramount Global (NASDAQ: PARA ) , has agreed to a deal with lenders to refinance some of its debt.

The WSJ reported , citing people familiar with the matter, that National Amusements paid down 20% of the outstanding loan to its creditors or about $250 million.

National Amusements will have to pay down another 15% in March. The creditors are getting increased interest and collateral on the loan.

The deal with lenders comes after the WSJ reported in July that National Amusements was talking with creditors to renegotiate some debt after an annual report disclosure raised going-concern fears.

NAI owns almost 80% of Paramount's voting stock.

National Amusements said in a statement to the WSJ, "Our business continues to strengthen with the postpandemic recovery in movie theater attendance; we have strong assets, and we are in an improved financial position, including having reduced our debt."

Other headlines to look out for on Seeking Alpha:

August CPI headline inflation to rise on oil surge, core CPI expected to receded

Stratasys rejects revised offer from 3D Systems

Tesla, suppliers expected to invest $15B in Gigafactory Mexico - report

On our catalyst watch for the day,

• Nike ( NKE ) will hold its annual meeting. Proxy firm ISS has recommended that Nike investors vote for a resolution calling on the company to disclose more data on pay equity for female and minority employees. A similar resolution was voted down in 2021. A separate resolution calls on Nike to offer more transparency on supply chain working conditions.

• Apple ( AAPL ) will hold its Wonderlust product launch at the company's headquarters in Cupertino, California, with new iPhones expected to be revealed.

U.S. stocks on Monday closed higher, as Wall Street rebounded from a negative first week of September.

The Nasdaq ( COMP.IND ) was the best performing major average, rising 1.14%. Tesla ( TSLA ) and Qualcomm ( QCOM ) were the top percentage gainers , with the former surging about 10%. Qualcomm ( QCOM ) added nearly 4%.

The S&P 500 (SP500) added 0.67%, while the Dow ( DJI ) rose 0.25%.

Of the 11 S&P sectors, nine ended in positive territory, with Consumer Discretionary advancing nearly 3%. Energy and Industrials were the two losers.

Treasury yields were slightly higher. The longer-end 10-year yield (US10Y) was up 3 basis points to 4.29%, while the more rate-sensitive 2-year yield (US2Y) was up 1 basis point to 4.99%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is down 0.1%, the S&P 500 is down 0.2% and the Nasdaq is down 0.2%. Crude oil is up 0.7% at more than $87 a barrel. Bitcoin is up 0.6%.

In the world markets, the FTSE 100 is up 0.5% and the DAX is down 0.4%.

The biggest stock movers for the day premarket: Humacyte (NASDAQ: HUMA ) is up more than 11% and this happened prior to the release of the top-line findings from its vascular trauma clinical trial .

Sight Sciences (NASDAQ: SGHT ) is down 30% after cutting its revenue outlook for the fiscal year, citing uncertainty over the future of Medicare coverage for its products as a factor weighing on demand.

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