US fund may sell Smurfit share bloc

TIGER Management, the American hedge fund which has been a seller of Irish stocks in recent months, is understood to be attempting to unload its remaining 40 million shares in Jefferson Smurfit Group. The 40 million shares are equivalent to 3.8 per cent of Smurfit's total equity and the sale of the shares to long term investors is seen as a key to the recovery of Smurfit shares.

According to market sources, Tiger is attempting to find buyers for its remaining shares, but is finding it difficult to find buyers willing to pay the price that the American hedge fund wants. Sources said Tiger is willing to accept 140p per share for its shares, but that there are few buyers of Smurfit in the market at that level.

Tiger built up a stake of 7.6 per cent in Smurfit but is understood that it began selling its shares when Smurfit bought back 25 million shares at 200p late last year. Since then, Tiger is understood to have been gradually reducing its holding but has now apparently decided to sell its remaining 3.8 per cent. Earlier this month, Tiger sold its 27 million shares in Waterford Wedgwood and that sale led to speculation that a sale of the Smurfit shares would quickly follow.

Smurfit shares have traded dismally since that 200p buyback late last year, as investors responded to a series of bad news announcement in the US packaging sector. The shares have traded as low as 142p and closed yesterday on 146p.

The reports that Tiger is trying to sell out of Smurfit comes as the group is in the middle of a series of institutional presentations. Briefings took place in London and Edinburgh this week and further presentations are planned for European and North American, investors.

Smurfit is understood to be using different Irish brokers for these presentations with the aim of getting the widest possible spread of potential investors. Late last year, Smurfit appointed UBS as its London broker, in place of SBC Warburg, with the express aim of building up the UK presence on its share register.

Brokers said that most Irish institutions have a full weighting in Smurfit shares and are unlikely to be in the market for any shares that Tiger might sell, and certainly at not anything like the suggested price of 140p.

Smurfit itself will be keen to see Tiger off its share register as the perception that the hedge" fund is a short term seller has, weighed heavily on the shares. Hedge funds do not traditionally take long term positions in equities and Smurfit will be hoping that the shares will ultimately find their way into funds managed by long term investors.