Packager Smurfit’s board unanimously rejects R129bn takeover bid
IRISH packaging company Smurfit Kappa Group has rejected a sweetened €8.9 billion (R128.62bn) takeover bid from International Paper Company, testing the US suitor’s resolve as the industry gains from a boom in online shopping deliveries.
Smurfit’s board unanimously spurned a revised offer of €37.54 a share in a statement yesterday, adding that International Paper’s original offer was for €36.46 a share.
Separately, Memphis, Tennessee-based International Paper, said it was willing to move “quickly and co-operatively” to engage with Smurfit Kappa, whose shares fell the most in more than a month. International Paper has now tried twice in about three weeks to acquire the Irish maker of cardboard boxes and paper bags that would bring it a wider European footprint.
It already manufactures one in three cardboard boxes in the US, and the purchase of Smurfit would make it the leading producer in Europe.
Under the terms of the revised bid, Smurfit Kappa shareholders would receive €25.25 in cash and 0.3028 new shares of International Paper stock for each Smurfit Kappa share held by them, according to the statement. International Paper said it had identified “at least” $450 million (R5.26bn) in savings over four years.
Those synergies were “comfortably in the historical range of deals for the sector” and would help International Paper’s share price, David O’Brien, an analyst with Goodbody Stockbrokers in Dublin, said in a research note. At the current bid price, a takeover by International Paper of Smurfit Kappa would rank as the second-largest deal in the cardboard-packaging and paper-products industries, coming after Koch Industries’ acquisition of Georgia-Pacific in 2005 for about $12.6bn, according to data.
Deals
KUS producer WestRock Co agreed to buy KapStone Paper & Packaging earlier this year for about $3.4bn.
So far this year, there have been more than 40 cardboard-packaging and paper-product deals, including the bid for Smurfit, according to data.
The battle for Smurfit might draw in more bidders, Cord Prinzhorn, the chief executive of smaller Austrian industry rival Prinzhorn Holding, said in an interview this month.
So far, no other bidder has publicly emerged.
Smurfit has about 46 000 employees across 35 countries in Europe and North and South America and had sales of €8.6bn in 2017. International Paper has about 52 000 workers and operations spanning the Americas, Asia, Africa, Europe and the Middle East, according to its website.
The Irish company decided on March 6 to reject International Paper’s initial cashand-stock bid, which it said had undervalued future growth prospects.
The shares fell as much as 4 percent yesterday and were down 3.3 percent at €33.60 at 11.06am in Dublin, giving the company a market value of €8bn.