Smurfit Kappa, Dublin, Ireland, this week reported that it has rejected a March 22, 2018, increased takeover offer from International Paper, Memphis, Tenn., USA, saying the offer undervalued Europe's largest paper packaging producer and made no strategic sense, according to a Bloomberg news report this past Monday, March 26, 2018.

Smurfit Kappa earlier this month (March 6) announced that it received an unsolicited acquisition proposal from IP, whereby Smurfit Kappa shareholders would receive a combination of cash and a minority holding in the combined business. 

At that time, Smurfit Kappa reported that its board had carefully considered the proposal and believed it is in the best interests of the Group’s shareholders and other stakeholders to pursue its future as an independent company, operating as a European and Pan-American leader in paper-based packaging. 

 

 

 

Smurfit Kappa recently announced a record EBITDA for 2017 of EUR 1,240 million and a full year ROCE of 15%, and the underlying positive trading conditions have continued into 2018. As part of its year end results, Smurfit Kappa announced an acceleration of its investment program based on plans to improve its market position and strengthen its integrated model between 2018 and 2021.

According to Smurfit Kappa, the March 6 proposal failed entirely to reflect the Group’s strong growth prospects and attractive industry outlook. Under IP's revised proposal of March 22, Smurfit's shareholders were offered EUR 25.25 in cash, up from the previous offer of EUR 22 and 0.3 new shares of International Paper for each Smurfit share they hold. The offer valued the company at ER 9.5 billion.

In the Bloomberg report of this week, Smurfit Kappa said the revised proposal represents an increase of EUR 1.08 per share, or less than 3%, based on IP's closing price on March 23. The "revised proposal fundamentally undervalues the group and remains significantly below the valuations set by recent industry transactions," Smurfit emphasized.

International Paper said the cash component of the revised proposal is increased by 15%, based on its March 6 proposal. It said that notwithstanding the rejection, it believed the revised proposal provided the best immediate and long-term value for Smurfit Kappa shareholders.

The company reiterated that it sees its future as an independent company, headquartered in Ireland.