International Paper Rules Out Hostile Takeover Of Smurfit
Zacks Investment Research | May 16, 2018 11:10PM ET
Per Reuters, International Paper Company (NYSE:IP) has decided not to put across a hostile bid to take over its Ireland-based rival, Smurfit Kappa. The company was given time up to Jun 6 to make a binding offer for the buyout, by the Irish Takeover Panel.
In March, International Paper’s bid to take over Smurfit Kappa was rejected by the European rival citing gross undervaluation and arguing that it was better served pursuing its future as an independent company. The proposal included a cash-and-stock offer of €25.25 in cash along with 0.3 new shares of International Paper for each share of Smurfit. The previous offer valued the Irish group at €8.9 billion.
International Paper has changed its terms to offer Smurfit shareholders a "mix and match" facility that would allow them to receive a greater or lesser proportion of cash or shares.
At the outset, the company stressed the importance of proceeding on an agreed basis. It believes that its current proposal represents a compelling strategic and financial rationale for a merger with Smurfit Kappa.
In that context, International Paper has confirmed that it will not proceed with a binding offer unless it is recommended by Smurfit Kappa's board of directors. Also, the company confirmed that it would seek a secondary listing on the London Stock Exchange, to enable Smurfit Kappa shareholders to realize the potential value of the transaction.
However, Smurfit Kappa believes that International Paper’s latest proposal has failed to value its intrinsic business worth and it is very comfortable with the position outlined to its shareholders. International Paper suggested that the two companies should meet to discuss the potential for the combined firm.
International Paper continues to restructure itself to transform into a core packaging company. M&As remain a key strategy to strengthen its long-term business proposition.
The company is taking initiatives to improve its operating margins over time across the business. However, over the past three months, the stock has underperformed the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.