Back to top

International Paper Drops Buyout Proposal for Smurfit Kappa

Read MoreHide Full Article

International Paper Company (IP - Free Report) has decided to cancel its proposal for the takeover of the Irish packaging company — Smurfit Kappa — due to lack of engagement from the latter’s management.

Memphis-based International Paper was given time until Jun 6 to make a binding offer for the buyout by the Irish Takeover Panel. The company confirmed that it has dropped its pursuit to acquire its Ireland-based rival.

It is worth noting that International Paper had made two takeover proposals in February and March, but both were rebuffed by Smurfit Kappa’s management, citing gross undervaluation. International Paper first valued Smurfit Kappa at €36.46 per share and the second at €37.54 per share or €8.9 billion.  

Also, in May, International Paper decided not to put across a hostile bid to acquire Smurfit Kappa and stressed the importance of proceeding on an agreed basis. It suggested that the two entities should meet to discuss the potential of the combined firm.

Per Ireland's rules, International Paper will be barred from making fresh attempts to acquire Smurfit Kappa for the next 12 months.

Nevertheless, International Paper remains focused on executing its operational strategy, which will boost shareholders’ value in the future.

The company continues to restructure itself to transform into a core packaging company. M&As remain a key strategy to strengthen its long-term business proposition.

It is taking initiatives to improve its operating margins over time across the business. The stock has outperformed the industry with an average return of 4% against a decline of 0.2% for the latter in the past three months.

International Paper currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Domtar Corporation (UFS - Free Report) , KapStone Paper and Packaging Corporation and Stora Enso Oyj (SEOAY - Free Report) . While Domtar and KapStone sport a Zacks Rank #1 (Strong Buy), Stora Enso carries a Zacks Rank #2. 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 exceeded earnings estimates thrice in the trailing four quarters with an average positive surprise of 18.7%.    

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

Stora Enso has an expected long-term earnings growth rate of 6.9%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

In-Depth Zacks Research for the Tickers Above

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

International Paper Company (IP) - free report >>

Domtar Corporation (UFS) - free report >>

Stora Enso Oyj (SEOAY) - free report >>

More from Zacks Analyst Blog

You May Like

Published in