Smurfit Kappa’s shares fell this morning after it rejected a revised bid by International Paper.
The Dublin-headquartered packaging giant said that the bid ‘fails to value the group’s true intrinsic business worth’, with reference to its performance last year.
Smurfit Kappa said it received a revised bid from International Paper last Thursday, 22 March, which would see Smurfit Kappa shareholders get €25.25 in cash and 0.3028 new shares of International Paper common stock for each Smurfit Kappa ordinary share held by them.
The recent proposal represented a value increase of €1.08 per share, which equates to less than 3% to International’s previous bid which it made on 6 March.
'Unanimously Rejected'
The Smurfit Kappa board said that following careful consideration it has ‘unanimously rejected’ the revised proposal, which ‘fundamentally undervalues the group’.
“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, operating as the European and Pan-American leader in paper-based packaging,” it said.
The revised proposal still included a significant proportion of of the consideration in the form of International Paper shares which are US-listed, which represent uncertain value and would expose Smurfit Kappa shareholders to the risk of significantly greater leverage and the challenges of integrating two businesses with fundamentally different cultures, according to Smurfit Kappa.
Group Value
“On 6 March, the board of Smurfit Kappa unanimously rejected International Paper’s unsolicited and highly opportunistic proposal,” said Liam O’Mahony, chairman of Smurfit Kappa. “The revised proposal does not offer Smurfit Kappa shareholders much more than compensation for the fall in International Paper’s share price since that date and again entirely fails to value the group’s true intrinsic business worth and future prospects. We delivered a record performance in 2017 and underlying trading momentum has continued into 2018.”
“Moreover, the Revised Proposal does not make strategic sense for Smurfit Kappa and its stakeholders,” O’Mahony continued. “Smurfit Kappa has a distinct business model and culture as a customer-oriented, performance-led packaging leader and has already communicated a strong plan to accelerate development and performance with its 2017 year-end results.
The Board unanimously reaffirms its belief that it is in the best interests of the group’s stakeholders for Smurfit Kappa to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging”.
© 2018 - Checkout Magazine by Kevin Duggan
