Smurfit Kappa has agreed to buy Dutch paper and recycling firm Reparenco for a fee of around €460 million, the Irish packaging group said on Thursday, in its effort to see off a takeover bid from U.S. rival International Paper (IP).
Smurfit said the acquisition of the privately-owned business accelerated its strategic objectives under a four-year plan laid out in February when it said it would increase investment in its existing businesses by €1.6 billion.
Negotiations to buy the business that generated €41 million of core earnings in the 12 months to April 2018 began on Feb. 1, Smurfit said, before IP made its first approach.
Complementary Acquisition
“We are pleased to announce our agreement to acquire Reparenco, successfully concluding a process which began on February 1st this year. The acquisition of Reparenco is complementary with our existing business; strengthens our integrated business model; and accelerates a central element of our medium term plan," chief executive Tony Smurfit said in a statement.
"We welcome all the Reparenco employees to Smurfit Kappa. We believe there is a strong cultural fit between our businesses and that, together, we will generate value in the short, medium and long term for all our stakeholders.”
Smurfit Kappa twice frustrated a bid to combine the largest listed U.S. paper packaging firm with Europe's biggest, most recently rejecting a raised takeover offer from IP in March, arguing it was better served pursuing its future independently.
IP, whose cash and shares offer in March valued the Irish group at €8.9 billion, said last week it would not make a hostile bid after being given until June 6 to make a binding offer or walk away.
Enter Talks
The Financial Times reported on Wednesday that a trio of Smurfit shareholders have asked the Irish firm to enter talks with IP.
It quoted British asset management firm Janus Henderson Group PLC, which holds a 4.3 percent stake, as saying Smurfit should either get around the table to seek a higher price or explain why it was not engaging.
A spokeswoman for Smurfit said she had no comment on the report. Smurfit's CEO told an analyst call on the Reparenco deal that the board was unanimous in rejecting IP's unsolicited approach.
An IP spokesman said the company was confident that engagement with Smurfit would unlock the deal's value potential.
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