Smurfit Rejects Fresh $11 Billion International Paper Bid

Irish packaging company Smurfit Kappa Group Plc rejected a sweetened 8.9 billion euro ($11 billion) takeover bid from International Paper Co., testing the U.S. suitor’s resolve as the industry gains from a boom in online shopping deliveries.

Smurfit’s board unanimously spurned a revised offer of 37.54 euros per share, according to a statement Monday, adding that International Paper’s original offer was for 36.46 euros per share.

“The board is resolute in its belief that the best interests of the group’s stakeholders are served by pursuing its future as an independent company,” the Dublin-based company said. “The revised proposal also fundamentally undervalues the group and remains significantly below the valuations set by recent industry transactions.”

Separately, Memphis, Tennessee-based International Paper said it’s willing to move “quickly and cooperatively” to engage with Smurfit Kappa, whose shares fell the most in more than a month.

Smurfit Rejects Fresh $11 Billion International Paper Bid

International Paper has now tried twice in about three weeks to acquire the Irish maker of cardboard boxes and paper bags that would bring it a wider European footprint. It already manufactures one in three cardboard boxes in the U.S., and the purchase of Smurfit would make it the No. 1 producer in Europe. The companies are benefiting from the rise in e-commerce that has boosted the need for goods to be packaged before delivery.

Deal Synergies

Under the terms of the revised bid, Smurfit Kappa shareholders would receive 25.25 euros in cash and 0.3028 new shares of International Paper stock for each Smurfit Kappa share held by them, according to the statement. International Paper said it has identified “at least” $450 million in savings over four years.

Those synergies are “comfortably in the historical range of deals for the sector” and will help International Paper’s share price, David O’Brien, an analyst with Goodbody Stockbrokers in Dublin, said in a research note.