Pictured: Tony Smurfit, CEO, Smurfit Kappa Group.
Smurfit Kappa Group’s share price jumped more than 6 per cent, to €36, after opportunistic approach by US rival.
The board of Smurfit Kappa Group today confirmed they have rejected a takeover offer from US rival International Paper, to buy the company at a price of €22 in cash and 0.3028 new International Paper share for each Smurfit share. This offer valued Smurfit Kappa Group at €8.6 billion, which was seen by the board to be undervaluing the Group.
The Group’s share price jumped by over 18 per cent on Tuesday after International Paper flagged their intentions, and peaked at a record €36.40 early on Wednesday. Smurfit Kappa Group is listed on the Irish Stock Exchange and on the FTSE 100. A takeover by International Paper would mean delisting from the Irish Stock Exchange, a blow, considering it is one of the largest companies on it.
In a statement from Smurfit Kappa Group, it said, “Smurfit Kappa notes the announcement released by International Paper company setting out the price of the unsolicited and highly opportunistic proposal . . . Shareholders are strongly advised to take no action.”
“The board of Smurfit Kappa has already carefully considered, with its financial advisers, the proposal in detail and has unanimously rejected it on the basis that it fails entirely to reflect the group’s superior prospects as an independent business and represents a valuation multiple significantly below recent comparable transactions.”
However, it has been reported that a source, who asked not to be identified, has said Smurfit would consider an offer from International Paper if it returned with an offer above €40 per share.
Bloomberg reported that a second offer of between €40 and €43 per share would equate to the valuation that WestRock Co. paid for Kapstone Paper & Packaging in a $3.4 billion deal earlier this year, according to Gerard Moore, an analyst with Investec Plc.
Smurfit Kappa Group, the family paper packaging company brought to international prominence through a series of acquisitions by legendary businessman Dr Michael Smurfit, is now a publicly listed company, run by Group CEO Tony Smurfit. Smurfit Kappa Group operates in 35 countries with 46,000 employees and 370 worldwide. It is the number one paper producer in Europe, while International Paper is a US market leader, making one in three boxes produced in the US.