Smurfit Kappa rejects IP for the second time

For the second time this month, Smurfit Kappa has said no to a proposal from International Paper. Kappa’s board said it received a revised proposal from IP on Thursday evening, March 22 2018, which “fails to reflect Smurfit Kappa’s intrinsic value, track record and superior prospects as an independent business.”

Under the terms of the revised proposal, Smurfit Kappa shareholders would receive €25.25 in cash and 0.3028 new shares of International Paper common stock for each Smurfit Kappa ordinary share held by them.

Based on International Paper’s closing share price on March 23, 2018 of $50.15 and a €:$ exchange rate of €1:$1.2353, the revised proposal would value each Smurfit Kappa share at €37.54, reduced to €36.90 when a final dividend is excluded.

IP’s earlier proposal on March 6 valued each Smurfit Kappa share at €36.46 (without reduction for the Final Dividend), Kappa said. The revised proposal represents an increase in value of only €1.08 per share, equivalent to less than 3 percent.

Following careful consideration, together with its financial advisers, Kappa’s board unanimously rejected the revised proposal.

“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,” the company said.

“The revised proposal does not make strategic sense for Smurfit Kappa and its stakeholders,” 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 (March 6) 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. 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.”

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