The acquisition would allow International Paper to significantly diversify its business beyond North America.
March 6, 2018
Smurfit Kappa Group Plc, Europe’s largest paper packaging producer, said on Tuesday it had rejected a takeover offer from U.S. peer International Paper Co, which the suitor later revealed was worth EUR 8 billion (USD 10 billion).
The acquisition would allow International Paper to significantly diversify its business beyond North America. The bid comes as growing consumer spending and the popularity of online shopping have boosted demand for packaging.
International Paper said it had offered EUR 22 in cash and 0.3028 new International Paper share for each Smurfit share, a premium of 27.4 percent to where Dublin-based Smurfit ended trading on Monday.
Smurfit said the offer “fails entirely” to reflect its growth prospects and industry outlook. News of the bid sent Smurfit’s shares surging more than 18 percent to EUR 33.86. International Paper said it remained ready to engage with Smurfit’s board and shareholders to discuss both the merits of its bid and the reasons why “it believes it provides the best near and long term value for Smurfit Kappa shareholders.”
“The offer is not particularly generous and we’d expect IP to come back,” Liontrust’s Stephen Bailey said in an interview. “An offer in excess of EUR 40 a share would be closer to fair value. You do expect to pay a big premium for it to be taken over as it’s a decent business with no obvious problems.”
Memphis-based International Paper, which generates around 75 percent of its sales in North America, had a market capitalization almost three times that of Smurfit Kappa at USD 24.1 billion before its offer was made public.