Smurfit Kappa Group would consider holding talks with International Paper if the US packaging giant raises its offer for the Irish company, according to two people familiar with the matter.
The Dublin-based maker of cardboard boxes and paper bags on Tuesday rejected International Paper’s €8.6 billion bid, saying the €36.46 cash-and-shares proposal “fails entirely” to reflect its growth prospects. The shares increased by a record, and extended the gain by as much as 6% Wednesday.
Smurfit will engage with International Paper if it returns with an acceptable offer above €40-a-share, said one of the people, who asked not to be identified as the company’s position isn’t public.
Smurfit would evaluate any credible offer on its merits, a spokesman said, while reiterating that the initial proposal doesn’t reflect the company’s prospects and represents a valuation below recent comparable deals. International Paper declined to comment.
Share Movement
The stock gained 6.3% to €36 in Dublin, valuing the company at €8.5 billion. International Paper dropped 4.7% to $55 in New York.
A second offer of between €40 and €43 per share would equate to the valuation that WestRock Co. paid for Kapstone Paper & Packaging in a $3.4 billion deal earlier this year, said Gerard Moore, an analyst with Investec in Dublin.
International Paper makes one in three cardboard boxes in the US and a purchase of Smurfit would see it take over the No. 1 producer in Europe.
The offer is “fundamentally opportunistic” and “significantly undervalues” the group, the Irish company said Tuesday. Smurfit plans about 1.6 billion euros in capital investment and is committed to steady acceleration of dividend payments, it said.
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