Wednesday 21 March 2018

US rival 'eyes €8.1bn bid' for Smurfit Kappa

Gerard "Gary" McGann, chief executive officer of Smurfit Kappa Group Plc (Simon Dawson/Bloomberg via Getty Images)
Thomas Molloy

Thomas Molloy

US-based International Paper is considering an €8.1bn takeover of Dublin-listed Smurfit Kappa, according to weekend media reports.

Tennessee-based International Paper is "believed to be exploring a bid" for Smurfit Kappa at €36 a share, according to at least one report. International Paper is reported to have hired Deutsche Bank to help with the bid.

A bid for Smurfit Kappa would be the latest in a series of takeovers of European companies by US rivals as the dollar's recent gains make European companies look cheap.

FedEx said last week that it plans to buy the Dutch parcel-delivery firm TNT Express for €4.4bn. US drinks packaging giant Bell recently agreed a takeover of the UK's Rexam.

Smurfit Kappa is one of the biggest companies on the Dublin stock exchange, while chief executive Gary McGann is the best paid. The shares have risen 67pc in the last 12 months, making it the best performing blue-chip stock in Dublin amid persistent rumours that the company might be sold.

Amcor, an Australian paper company, has also been mooted as a buyer.

Sky News quoted one City of London source as saying that International Paper has been looking at an offer at about €36-a-share if it does make a proposal.

Smurfit operates in 32 countries, employs 42,000 people and made sales of €8bn last year.

Smurfit and International Paper declined to comment last week.

The company was established as a box-maker in Rathmines, Dublin in 1934 and was acquired by Jefferson Smurfit in 1938, trading afterwards as Jefferson Smurfit. It was first listed on the Irish Stock Exchange in 1964 but later taken private by Madison Dearborn.

The Chicago-based private equity company backed a €3.7bn move to take Jefferson Smurfit private in 2002.

In 2005, it acquired Dutch packaging group Kappa, becoming Smurfit Kappa.

That brought venture capital companies Cinven and CVC into the shareholder fold along with Michael Smurfit and Madison Dearborn.

Two years later, Smurfit Kappa was floated on the stockmarket, with Madison Dearborn holding a 21pc stake and CVC and Cinven owning a total of 23pc. All three US investment companies have since sold their stakes while Mr Smurfit has kept his.

In Numbers

Number of countries with Smurfit factories - 32

Sales in 2014 - €8bn

Number of employees - 42,000

Irish Independent

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