Smurfit Kappa sends revised offer packing

Smurfit Kappa rejected a second takeover bid from International Paper

Dublin-headquartered packaging giant Smurfit Kappa has turned down a revised multibillion-pound takeover offer from a U.S. counterpart after deciding that the proposal "undervalues the group" and remains "significantly below the valuations set by recent industry transactions".

The latest proposal from International Paper (IP) is on the basis of €25.25 and 0.3028 IP shares for each Smurfit Kappa share.

As of 09:52 BST, Smurfit Kappa's share price had given up 3.79 percent to 2,942.00p, significantly underperforming the broader United Kingdom market, with the benchmark FTSE 100 index having climbed into positive territory and now standing 0.28 percent higher at 6,941.47 points.

Smurfit Kappa said on Monday that it had rejected a second takeover bid from Memphis-based International Paper in the space of a month, on the grounds that the proposal failed to reflect the group's "intrinsic value, track record and superior prospects as an independent business". International Paper has about 52,000 workers and operations spanning the Americas, Asia, Africa, Europe and the Middle East. The new offer marks an improvement on the previous €36.46-per-share bid. Smurfit has a market capitalisation of EUR8.23 billion based on Friday's closing price of EUR34.74 for its Irish-listed shares.

Shares in the FTSE 100 firm slipped 92p to 2,966p on the rejection of the offer.

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Smurfit Kappa announced in a statement this morning that it had received a revised cash-and-share proposal from International Paper Company on Thursday evening, valuing each Smurfit Kappa share at €37.54. The other worry is that SKG will continue to hold out for improved terms which may never materialise. "In which case, shareholders are cashing out as close to the top as they can", said Accendo Markets analyst Mike Van Dulken.

International Paper Company submitted the proposal to Smurfit Kappa's chairman Liam O'Mahony on 22 March following a series of attempts to enter discussions.

"International Paper remains willing to move quickly and cooperatively to engage with Smurfit Kappa with a view to achieving a recommended transaction.", the US company said Monday. "Accordingly, International Paper remains willing to move quickly and cooperatively to engage with Smurfit Kappa with a view to achieving a recommended transaction".

"The second bid does, after all, show willingness to maintain the bid's 67% cash value to SKG shareholders".

However, O'Mahony again called the offer "highly opportunistic". "Especially given the risk that the value of the 32% share component worsens further, assuming the deal requires at least come anti-trust approval", Van Dulken added.

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