Paper, Mergers & Acquisitions

Smurfit Kappa rebuffs second IP acquisition offer

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The board of directors of Ireland-based Smurfit Kappa Group (SKG) has announced it received a second proposal March 22, 2018, from United States-based International Paper (IP) about acquiring the company. Despite improving its initial offer, Smurfit Kappa has rejected IP a second time.

IP made its initial offer March 6, 2018.

The second offer included paying Smurfit Kappa shareholders €25.25 ($30.81) in cash, which would be reduced to €24.605 ($30.20) after payment of the final dividend of 64.5 cents recommended Feb. 7, 2018. SKG Shareholders also would have been given 0.3028 shares of IP stock for each SKG share owned. The stock and cash payout would result in €36.90 ($45.29) per share when the final dividend was excluded.

In rejecting the second offer, SKG’s board, along with its financial advisors, determined the best strategy going forward would be to pursue a future as an independent company, operating as what it calls “the European and pan-American leader in paper-based packaging.”

IP contends its offer represents a 38.7 percent premium to SKG’s share price as of March 5, 2018, and a 31.2 percent premium compared with the stock price earlier in March, when its first offer was made.

“We have approached Smurfit Kappa because we believe that there is a compelling strategic and financial logic for a combination,” says Mark Sutton, IP chairman and CEO. “We view our revised proposal as attractive for both sets of shareholders. Smurfit Kappa shareholders will benefit from an attractive premium with a combination of cash upfront and will have the opportunity to participate in the future value creation of the combined business. International Paper shareholders will benefit from the synergies of the combination and International Paper’s proven integration track record and disciplined financial approach.”