WestRock Company (NYSE:WRK) signed a definitive agreement to acquire KapStone Paper and Packaging Corporation (NYSE:KS) for $3.4 billion on January 28, 2018. Under the terms of agreement, KapStone stockholders will have the option to receive $35 per share in cash or elect to receive 0.4981 WestRock shares per KapStone share, with elections stock consideration capped at 25% of the outstanding KapStone shares but no limit on the number of KapStone shares that can receive cash consideration. As on September 5, 2018, approximately 3.2% of the shares of KapStone common stock elected to receive stock consideration. WestRock will finance the transaction through the issuance of debt from a bank term loan facility, existing credit commitments and cash on hand. WestRock will finance the cash consideration through the issuance of new debt under a fully committed financing package. WestRock expects to refinance existing KapStone debt assumed as part of the transaction upon closing. As of March 1, 2018, WestRock has issued $600 million aggregate principal amount of 3.75% senior notes due 2025 and $600 million aggregate principal amount of 4% senior notes due 2028 to fund the transaction. Post transaction, KapStone will be integrated into WestRock's Corrugated Packaging segment. Following the completion of the transaction, WestRock will cause the KapStone shares to be delisted from the NYSE and deregistered under the Exchange Act. KapStone will be required to pay to WestRock a termination fee of approximately $105.6 million, or approximately 3% of the equity value of the transaction.

At the time of closing, the employees of KapStone will become the part of WestRock. The transaction is subject to a number of customary closing conditions, including a vote by KapStone's stockholders, effectiveness of Form S-4, listing of shares of Westrock, the delivery of written legal opinions from counsel relating to the U.S. federal income tax code treatment of the mergers and Hart-Scott-Rodino clearance in the United States. The transaction is not conditional upon financing. The transaction has been unanimously approved by the Board of Directors of WestRock and KapStone. WestRock and KapStone have received clearance for the mergers from the Austrian, German and Mexican regulatory authorities. On April 13, 2018, the U.S. Department of Justice (DOJ) requested for additional information regarding the transaction. The requests were issued under notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976. As on September 17, 2018, WestRock agreed to extend the date before which it will not consummate the pending acquisition to November 15, 2018, unless it has received notice from the U.S. Department of Justice prior to such date that the DOJ has closed its investigation of the pending acquisition. WestRock agreed to the extension in response to the DOJ's request for additional time to review the documents provided to the DOJ by WestRock and KapStone. As of October 30, 2018, the U.S. Department of Justice approved the transaction. KapStone's Chairman, Roger Stone, and President and Chief Executive Officer, Matt Kaplan, have entered into voting agreements, pursuant to which they have agreed to vote their shares in support of the transaction, subject to certain limitations. The transaction is expected to close during the quarter ending September 30, 2018. As of May 7, 2018, the transaction is expected to close by the end of the quarter ending September 30, 2018 or December 31, 2018. As of July 19, 2018, the transaction is expected to close by the end of the quarter ending September 30, 2018. As on September 17, 2018, the transaction is expected to close by the end of the calendar year 2018. As of October 30, 2018, the transaction is now expected to close on November 2, 2018. Upon closing, the transaction is expected to be immediately accretive to WestRock's adjusted earnings and cash flow, inclusive of purchase accounting adjustments.

Lazard Frères & Co. LLC acted as lead investment bank and financial advisor to WestRock and provided its Board of Directors with a fairness opinion. Wells Fargo & Company is the agent for a syndicate of banks that provided the financing for the transaction and acted as the financial advisor to WestRock. Richard Hall, Andrew C. Elken, Maya A. Rosenthal-Larrea, James J. Valenza, Caspar J. Haarmann, Andrew J. Pitts, George E. Zobitz, Christopher J. Kelly, Steven Y. Li, Joshua S. Aronoff, J. Leonard Teti II, Arvind Ravichandran, Matthew Cantor, Matthew J. Bobby, Jana I. Hymowitz, Alison E. Beskin and Jennifer S. Conway from Cravath, Swaine & Moore LLP acted as the legal advisors for WestRock. Moelis & Company LLC provided fairness of opinion and also acted as the financial advisor for a fee of $22 million whereas Kevin F. Blatchford and Scott R. Williams of Sidley Austin LLP acted as the legal advisors to KapStone. Eric Hirschfield, Vasu Pinnamaneni and Lee LeBrun from Rothschild Inc. provided fairness of opinion and also acted as the financial advisors for KapStone for a fee of approximately $22 million. Mark Gerstein, Christopher Drewry, Ian Helmuth and Sarah Kherzi from Latham & Watkins LLP acted as legal advisors to Moelis & Company LLC. Barbara Becker from Gibson, Dunn & Crutcher LLP acted as the legal advisor for Lazard Frères & Co. LLC. J.D. Weinberg, John Mei, Ansgar Simon of Covington & Burling LLP acted as legal advisors to KapStone. Computershare Trust Company, N.A. acted as exchange agent to WestRock. Morrow Sodali LLC acted as proxy solicitation agent for KapStone and will be paid total fee of $12,500. Andrew J. Pitts, Steven Y. Li, Adam G. DiSimine, D. Ryan Hart, Arvind Ravichandran and Rory M. Minnis of Cravath represented WestRock in senior notes offering. American Stock Transfer & Trust Company, LLC acted as transfer agent for KapStone. King & Spalding LLP acted as legal advisor to WestRock.

WestRock Company (NYSE:WRK) completed the acquisition of KapStone Paper and Packaging Corporation (NYSE:KS) on November 2, 2018.