Monday 20 August 2018

US firm scraps plans for £7.8bn bid for packaging giant Smurfit Kappa

It follows a rebuffed takeover proposal tabled in March.

A planned bid for Smurfit Kappa has been scrapped (PA)
A planned bid for Smurfit Kappa has been scrapped (PA)

By Kalyeena Makortoff, Press Association Chief City Correspondent

International Paper has scrapped plans for an 8.9 billion euro (£7.8 billion) takeover offer for packaging giant Smurfit Kappa, blaming a lack of engagement from its board.

US-listed International Paper confirmed it was walking away from a potential deal months after putting forward a sweetened bid to its UK rival.

“The company will not make an offer for Smurfit Kappa Group, given the lack of engagement by Smurfit Kappa’s board of directors and management,” International Paper said in a statement.

It means scrapping a proposal first tabled in March of 25.25 euros (£22.04) in cash and 0.3028 of new shares in International Paper, per Smurfit Kappa share.

The proposal had been sweetened from its initial approach made earlier that month.

It valued each Smurfit Kappa share at 37.54 euros (£32.89) versus the previous offer of 36.46 euros (£31.95).

While we continue to believe in the strategic and financial potential of this combination, our commitment was to proceed in a disciplined manner that would create value for both sets of shareholders International Paper CEO Mark Sutton

Smurfit had rebuffed the proposed bid, saying it failed to reflect its true value.

Chairman and chief executive of International Paper Mark Sutton said: “While we continue to believe in the strategic and financial potential of this combination, our commitment was to proceed in a disciplined manner that would create value for both sets of shareholders.

“Moving forward, we remain focused on executing our strategy and are excited about our outlook.

“We have many levers to create shareholder value and will be responsible stewards of our shareholders’ capital.”

The news sent Smurfit Kappa shares to the top of the FTSE 100.

Its stock price rose as much as 6% before dropping back to trade higher by around 3.3%.

Smurfit Kappa’s board said it believes the company has “superior prospects as a standalone business”.

Chief executive Tony Smurfit said the business would drive ahead with its medium-term plan which includes the acquisition of Reparenco – a privately owned Dutch paper and recycling business it snapped up for 460 million euros (£402 million) last month.

“The acquisition of Reparenco will have a positive impact on our integrated model and we are targeting delivery in excess of 30 million euros (£26.2 million) of synergy benefits,” Mr Smurfit said.

“Strong business conditions and a positive operating environment together with significant and early progress against our medium-term plan reaffirms our confidence that 2018 EBITDA will be materially better than 2017.

“We expect the second quarter to represent another strong performance and we will provide a further update at the time of our half-year results on August 1.”

Press Association

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