Sunday 21 October 2018

Smurfit Kappa shares up amid US bid standoff

Smurfit Kappa's customers include Aldi and Unilever Photo: Mike Ellis
Smurfit Kappa's customers include Aldi and Unilever Photo: Mike Ellis
John Mulligan

John Mulligan

Shares in packaging group Smurfit Kappa rose again yesterday, despite the Irish company reiterating its opposition to an €8.6bn takeover approach from US firm International Paper.

"The board of Smurfit Kappa has already carefully considered, with its financial advisers, the proposal in detail and has unanimously rejected it on the basis that it fails entirely to reflect the group's superior prospects as an independent business and represents a valuation multiple significantly below recent comparable transactions," Smurfit Kappa said.

The comments came after International Paper issued a statement on Tuesday evening in which it said the proposed takeover of the FTSE-100 company would be an "excellent strategic fit" that would create long-term value for both Smurfit Kappa and International Paper.

Smurfit Kappa shares, traded as high as €35.24 on Tuesday in Dublin, but eased later in the day. Yesterday, they added as much as 5pc to €35.50 as investors continue to weigh the likelihood of a higher proposed offer from International Paper.

International Paper said its cash-and-shares proposal would equate to a total of €36.46 per Smurfit Kappa share, valuing the Irish firm at €8.6bn.

The US firm said it remains "ready to engage" with Smurfit Kappa's board and its shareholders.

Some analysts reckon that Memphis-based International Paper could have to table an offer of more than €10bn in order to win over Smurfit Kappa shareholders.

Earlier this week Smurfit Kappa chief executive Tony Smurfit roundly rejected the approach from International Paper, saying that the Irish company's board recognises that it has a "really fantastic future ahead" as an independent company.

"The proposal that was given to us was so far away from anything that the board would even remotely consider, that they unanimously and unequivocally rejected it," he told the Irish Independent.

"The board mandate is to view what is put in front of us. What is put on front of us at this juncture is a proposal that is significantly below what we would even contemplate," he said.

"Obviously, if there was another proposal, the board would examine with the same thoroughness that they've examined this one," he added.

"We've a responsibility to our stakeholders, and that means all stakeholders. That very much includes our own people. But own people are, I think, very happy in Smurfit Kappa.

"If there are other proposals, the board will obviously have to look at them in that context. That's part of being a public company."

He has cited cultural differences as being among the hurdles that could hinder a successful takeover of Smurfit Kappa.

The company continued to urge its shareholders to take no action.

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