Smurfits exercise €1m share options

Two members of the Smurfit family have spent more than €1 million exercising share options in Jefferson Smurfit ahead of the €3.7 billion takeover by the US private-equity group Madison Dearborn Partners. It is understood the shares were exercised by Mr Tony Smurfit and Mr Dermot Smurfit for taxation purposes, although a spokesman attributed the purchase to "technical reasons".

The shares exercised will be compulsorily acquired by Madison Dearborn when the deal is finalised.

The bid was backed overwhelmingly by shareholders this month, paving the way for the departure from the Irish Stock Exchange of a bellwether on the market. Investors are expected to receive cash for their shares next month.

Jefferson Smurfit chairman and chief executive Dr Michael Smurfit is father of Tony Smurfit and brother of Dermot Smurfit, who are directors of the paper and packaging group. The shares exercised were denominated in sterling because both work in Britain, said the spokesman.

Mr Dermot Smurfit acquired 401,948 Jefferson Smurfit shares at £1.0232 sterling (€1.30) each, spending £411,273 (€522,209). These will be bought at €2.15 each by Madison Dearborn, yielding a profit of €341,655 when the deal closes. He will also hold a further 25,121 Smurfit Stone Container (SSCC) shares after the takeover as a result of the latest exercise.

But this figure is dwarfed by the €18.62 million valuation placed on all the shares and share options held by Mr Dermot Smurfit under the terms of the Madison Dearborn buy-out.

Jefferson Smurfit shares closed unchanged at €3.08 yesterday. The valuation also reflects the firm's 29.3 per cent holding in SSCC, which is being spun off to shareholders as part of the deal.

Mr Tony Smurfit acquired 248,628 Jefferson Smurfit shares worth €1.30 each, spending €323,216. When bought at €2.15 each by Madison Dearborn, these share will yield a profit of €211,333 and he will hold a further 15,539 SSCC shares. Under the terms of the deal, the value of Jefferson Smurfit shares and share options owned by Mr Tony Smurfit is €384,790.

The value of Jefferson Smurfit stock held by Dr Smurfit is €241.44 million according to the deal.

Shares and options worth €13.72 million are held by Mr Alan Smurfit, another brother of Dr Smurfit, who is also a director.

Dr Smurfit and other members of the management team will remain with the group after the deal is concluded.