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Smurfit Kappa repeats rejection of International Paper's 8.6bn bid approach
Smurfit Kappa has reiterated its rejection of International Paper's takeover approach after the US company revealed it proposed paying 8.6bn (£7.7bn) for Europe's biggest cardboard box maker.
The Memphis-based company said it proposed paying 22 in cash and 0.3028 new International Paper shares for each Smurfit Kappa share.
Based on International Paper's closing price on 5 March the approach valued each Smurfit Kappa share at 36.46 - 27.4% more than Smurfit Kappa's closing share price on the same date.
The proposal would value Smurfit Kappa's share capital at 8.6bn and leave the Dublin-based company's shareholders with a 15% stake in the combined company.
Revealing the bid approach on 6 March, Smurfit Kappa said it was highly opportunistic and undervalued the company's worth and growth opportunities.
The FTSE 100 company, listed in London and Dublin, repeated this judgment in a stock exchange announcement on Wednesday, responding to International Paper's statement.
"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," Smurfit Kappa said.
Smurfit Kappa's shares rose 4% to 35.22 in Dublin, suggesting investors had doubts that a deal would be struck.
In its statement, International Paper, the world's biggest pulp and paper company, rejected the accusation of opportunism. The US company said it made its proposal on 23 February after Smurfit Kappa reported record earnings on 7 February and its shares hit an all-time high on 20 February.
"By submitting the proposal after the release of Smurfit Kappa's full-year results and the medium-term outlook, International Paper was able to take account of this information (and the market's reaction to it) when making its approach," International Paper said.
Analysts at Olivetree have argued International Paper could pay 40 or more for each Smurfit Kappa share and make the deal work financially. They said the main difference between the companies appeared to be price, setting the scene for a tussle over what Smurfit Kappa is worth to its shareholders.