International Paper ready to improve offer for Smurfit Kappa

US paper group International Paper (IP) has signalled that it is ready to improve the terms and value of its proposal for Smurfit Kappa, after the Irish Takeover Panel gave it three weeks to announce whether it will make a binding bid for the Dublin-based cardboard box maker.

The Takeover Panel has given IP until 7am on June 6th to make an announcement, or face the prospect of a 12-month ban from making another approach.

IP said on Wednesday that it would be willing to provide Smurfit Kappa shareholders a “mix and match” facility, allowing them a greater or lesser proportion of cash or IP shares that were offered in its most recent proposal, tabled in March. Smurfit Kappa’s board unanimously rejected that offer of €25.25 in cash and 0.3 new IP shares.

Synergies

In addition, IP said that it believes that both companies should meet to discuss potential synergies of a combined group to “gain a better understanding of each company’s current outlook, in order to explore a path forward to a recommended transaction”. Market sources have read this as a clear signal that IP sees upside potential to its current $450 million (€380 million) synergies estimates, which could pave the way for a higher offer.

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IP has also confirmed that it would seek a secondary listing for its stock on the London Stock Exchange, which would be preferable to many European-based shareholders in Smurfit Kappa to the company’s existing New York quotation.

The Memphis-based company added on Wednesday that it will not mount a hostile bid for Smurfit Kappa.

Speaking separately at a conference on Wednesday, IP chief financial officer Glenn Landau said: “After multiple attempts by IP to discuss value, we today have had no engagement from Smurfit Kappa . . . Quite frankly, we do not understand why Smurfit Kappa’s board of directors is depriving their shareholders of the opportunity to merely explore this combination.”

Smurfit Kappa reiterated that its board “continues to believe that the best interests of the group’s stakeholders are served by pursuing its future as an independent company”.