Suzano backs away from possible IP takeover

Brazilian pulp producer Suzano has officially terminated negotiations for a possible acquisition of Memphis, Tennessee-based International Paper (IP) after reaching what it says was a maximum price without engagement from IP.

The company released a statement June 26 formalizing that it will not continue to pursue a transaction involving the acquisition of IP after previous reports indicated Suzano was pursuing an all-cash takeover worth nearly $15 billion.

“It is important to emphasize that it has always been a condition of Suzano for the completion of this transaction that the engagement between the parties be based on private, confidential and amicable terms,” Suzano says in a statement. “As it was not possible to proceed in this manner, Suzano has decided to terminate negotiations.”

When the proposed deal originally was reported in May, sources indicated to Reuters that Suzano was in talks to line up debt financing to support its bid for IP and that the offer was conditional on IP abandoning its deal with DS Smith.

IP, however, maintained that it was focused on completing its merger with London-based paper and packaging company DS Smith.

“The IP team, led by new CEO Andy Silvernail, is executing on business strategies and pursuing commercial and cost improvement initiatives across the portfolio to achieve best-in-class profit margins and significant earnings growth,” IP says in a statement in May.

“In addition, as industry conditions continue to improve, IP will come out of a cyclical bottom for earnings. The company is also focused on completing its previously announced combination with DS Smith, which offers a unique and highly compelling opportunity to create significant shareholder value above its base plan.”