Smurfit Kappa to identify flotation price

Smurfit Kappa is likely to identify the price range for its flotation before the weekend, brushing aside weakness on the international stock markets.

The €1.3 billion transaction, expected in the middle of the month, is likely to place an enterprise value of some €8.36 billion on the heavily indebted packaging group. This is in line with a sectoral valuation range of 7.6 times the €1.1 billion in earnings before interest, tax, depreciation and amortisation that Smurfit Kappa expects this year.

At a series of investor presentations to the Dublin market earlier this week, Smurfit Kappa indicated that some 300 of its managers will take up a portion of new shares when it returns to the stock market.

Management already holds a small shareholding in Smurfit Kappa, which is controlled by private equity groups Madison Dearborn, CVC and Cinven. None of these will sell shares in the flotation, but they will be free to sell when a 180-day lock-in expires.

While sources close to Smurfit Kappa said the group was "struggling to accommodate" expressions of interest in the flotation, some market figures said in private that the group will be hoping that the stock market turbulence will abate.

Smurfit Kappa has yet to publish a flotation prospectus and only draft versions have been given to potential investors. Stockbroking analysts who atten- ded a breakfast conference this week were not given copies of the document, it is believed.

The flotation marks the retirement of chairman Michael Smur- fit. Anglo Irish Bank chairman Seán FitzPatrick will become independent non-executive chairman after flotation.

The process is designed to optimise the group's capital structure and pay down some of its €4.88 billion debt pile.