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.
International Paper has now tried twice in
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.
At the current bid price, a takeover by International Paper of Smurfit Kappa would rank as the second-largest deal in the cardboard-packaging and paper-products industries, coming after Koch Industries Inc.’s acquisition of Georgia-Pacific LLC in 2005 for about $12.6 billion, according to data compiled by Bloomberg. U.S. producer WestRock Co. agreed to buy KapStone Paper & Packaging earlier this year for about $3.4 billion.
So far this year, there have been more than 40 cardboard-packaging and paper-product deals, including the bid for Smurfit, according to the Bloomberg data.
“International Paper believes the revised proposal provides the best immediate and long term value for Smurfit Kappa shareholders,” the U.S. company said in its statement, adding that the revised offer was submitted following a series of attempts to enter discussions and its rejection came “without any engagement.”
The battle for Smurfit may draw in more bidders, Cord Prinzhorn, chief executive officer of smaller industry rival Prinzhorn Holding GMBH, said in an interview this month. So far, no other bidder has publicly emerged.
Smurfit has about 46,000 employees across 35 countries in Europe and the Americas and had sales of 8.6 billion euros in 2017. International Paper has about 52,000 workers and operations spanning the Americas, Asia, Africa, Europe and the Middle East, according to its website.
The Irish company on March 6 rejected International Paper’s initial cash-and-stock bid, which it said undervalued future growth prospects. The shares on Monday fell as much as 4 percent and were down 3.3 percent at 33.60 euros at 11:06 a.m. in Dublin, giving a market value of 8 billion euros.
— With assistance by Jen Skerritt