Smurfit Kappa shares fall as revised US bid rejected
US suitor ups its bid by 3% but Irish cardboard box-maker says it doesn’t reflect group’s ‘intrinsic value’
Smurfit Kappa has unanimously rejected a revised offer from US suitor International Paper. Photograph: Jason Alden/Bloomberg
Shares in Smurfit Kappa fell on Monday morning as the in cardboard box maker rejected a revised bid from US suitor International Paper, on the grounds that the proposal fails to reflect the group’s “intrinsic value, track record and superior prospects as an independent business”.
The Dublin-based group said that it had received a subsequent offer last Thursday of €€25.25 in cash per share, and 0.3028 new shares of International Paper common stock for each Smurfit Kappa ordinary share held by them.
This would value each Smurfit Kappa share at €37.54, an increase of €1.08 per share, or 3 per cent, on a previous offer, which was rejected earlier this month. The revised offer saw International Paper increase the cash component of the bid from €22 a share previously.
However, Liam O’Mahony, chairman of Smurfit Kappa, said that the new proposal “does not offer Smurfit Kappa shareholders much more than compensation for the fall in International Paper’s share price since [the original bid] and again fails to value” the group.
Meanwhile, International Paper is pressing for Smurfit Kappa to enter into talks, outlining that a tie-up should deliver $450 million (€363 million) a year within four years. However, restructuring costs to deliver that target will come to $570 million.
Shares in Smurfit Kappa fell as much as 4 per cent on Monday to €33.34.
The group said that its board has “unanimously rejected” this offer, as it is “resolute in its belief that the best interests of the group’s stakeholders are served by pursuing its future as an independent company”.
The board also said that the revised offer “fundamentally undervalues the group and remains significantly below the valuations set by recent industry transactions”, while it noted that much of the consideration offered is in US-listed shares, which “represent uncertain value, and would expose Smurfit Kappa shareholders to the risk of significantly greater leverage and the challenges of integrating two businesses with fundamentally different cultures”.
Headquartered in Memphis, Tennessee, International Paper is one of the world’s largest producers of fiber-based packaging, pulp and paper, and employs some 52,000 people worldwide.