Smurfit Kappa board faces backlash as bid hopes fade
A blame game is now threatening to erupt over International Paper’s (IP) aborted bid for Smurfit Kappa as shareholders in the Dublin-based giant question why the board refused to engage with its US suitor.
Smurfit Kappa shares plunged over the past two days as Memphis-headquartered IP looks set to sit on its hands as today’s deadline for a final offer passes, thwarting investor hopes of a €9bn takeover.
Close to a fifth of Smurfit Kappa’s shareholders reportedly favoured the board entering into discussions with IP following two rebuffed offers that valued the company at just under €40 a share.
As the prospect of a deal faded, shares in Europe’s largest box-maker plummeted – falling as much as 8.4pc yesterday .
One investor who holds the stock said the pressure was now on the board to justify how it could deliver an increase in valuation to match the 31pc bounce the shares had seen after IP’s approach.
In early March, when Smurfit Kappa revealed the first takeover offer, CEO Tony Smurfit described the proposal as “very opportunistic” in an interview with the Irish Independent. He claimed the US firm was attempting to “take advantage” of a valuation gap that was yet to close fully in advance of “the fantastic plans that we have”.
However, sources close to IP said the company had signalled its intention to sweeten the terms.
Last month, the Irish TakeoverPanel set 7 am on June 6 as a deadline for the world’s largest paper maker to make a binding offer for Smurfit.
While there was still time last night for the sides to come together, once the deadline passes IP won’t be able to rebid for a year – unless an offer is tabled by a third party.
In a note last week, Wells Fargo Securities analyst Chris Manuel put the probability of a deal going ahead at less than 20pc. Smurfit rejected as too low the earlier offers from IP, which last month ruled out a hostile bid.
The company rejected a first cash-and-stock proposal of €36.46 a share on March 6, and turned down a second, sweetened offer of €37.54 on March 26. Shares closed at €33.24 each.