Smurfit Kappa shares plunge ahead of takeover deadline
SMURFIT Kappa shares were the worst performing blue chip stock in London yesterday, closing down 6.5pc as the chances of a last minute bid ahead of a Takeover Panel deadline faded.
Shares in would-be bidder International Paper were up 3.48pc in the US.
Smurfit Kappa is Ireland’s sixth-most valuable quoted company and Europe’s biggest cardboard packaging producer.
It has been the subject of intense takeover interest since February, when US peer International Paper made an initial unsolicited approach, that was rebuffed by CEO Tony Smurfit.
A revised approach in March was again rejected.
International Paper mulled, but eventually baulked at going hostile.
International Paper’s revised approaches, combined with share-price moves, had nudged the value of its cash and shares offer close to the €40 a share Smurfit Kappa management and key shareholders are thought to aspire to, but without winning support from the target company board.
Amid an impasse, the Irish Takeover Panel imposed a June 6 “put up or shut up” deadline.
It means International Paper must make a formal offer for Smurfit Kappa by tomorrow or walk away and make no further approaches for a year.
While the market was closed in Dublin yesterday, Smurfit Kappa’s London listing allowed investors to trade on the lack of any update from either side ahead of tomorrow’s deadline.
The sharp fall in Smurfit Kappa’s share price reflects a bet that the looming deadline will not draw out a fresh offer from International Paper.
Last month management at Smurfit Kappa emphasised that its strategy was unchanged by the approaches, and unveiled their own €460m acquisition of Dutch paper and packaging company Reparenco.
Smurfit Kappa also announced its intention to invest €1.6bn over the next five years and to push up its return on capital employed to 17pc.
Meanwhile, yesterday, its UK based rival cardboardbox maker, DS Smith, proposed a €1.7bn all-cash deal to buy Spanish rival Europac.
That deal underscored consolidation in the paper and packaging industry, regardless of the outcome of the current battle for Smurfit Kappa.