Back to top

Image: Bigstock

International Paper Rules Out Hostile Takeover of Smurfit

Read MoreHide Full Article

Per Reuters, International Paper Company (IP - Free Report) 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 industry with an average loss of 6.6% compared with decline of 2.5% for the latter.



International Paper currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Domtar Corporation , KapStone Paper and Packaging Corporation and Neenah, Inc. . While Domtar and KapStone sport a Zacks Rank #1 (Strong Buy), Neenah carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Domtar has an expected long-term earnings growth rate of 5%. It has exceeded earnings estimates thrice in the trailing four quarters, with an average of 18.7%.

KapStone has an expected long-term earnings growth rate of 14%. It has exceeded earnings estimates twice in the trailing four quarters, with a beat of 12.9%.  

Neenah has an expected long-term earnings growth rate of 5%. It has exceeded earnings estimates in each of the trailing four quarters, the average being 10.7%.  

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


International Paper Company (IP) - free report >>

Published in