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On March 6, Smurfit Kappa announces that it has received « an unsolicited proposal from International Paper Company, headquartered in Memphis, USA, whereby International Paper would acquire Smurfit Kappa and Smurfit Kappa shareholders would receive a combination of cash and a minority holding in the combined business. »

The Board of Smurfit Kappa has carefully considered the Proposal and believes it is in the best interests of the Group’s shareholders and other stakeholders to pursue its future as an independent company, operating as the European and Pan-American leader in paper-based packaging. Smurfit Kappa is a world leader in paper-based packaging with an established track record of consistently delivering strong and improving operating and financial performance. The Group recently announced record EBITDA for 2017 of €1,240 million and a full year ROCE of 15% and the underlying positive trading conditions have continued into 2018. As part of its year end results, Smurfit Kappa announced an acceleration of its investment programme based on plans to improve its market position and strengthen its integrated model between 2018 and 2021. The Proposal fails entirely to reflect the Group’s strong growth prospects and attractive industry outlook.
Smurfit Kappa is Europe’s largest producer of paper-based packaging. Europe contributed 75% of the Group’s annual earnings and, according to the Global Corrugated Forecast prepared by NOA PRISM for the International Corrugated Case Association (ICCA), European demand is forecast to grow at a CAGR of between 1.7% and 2.3% up to 2021.
Factors contributing to strong, sustained European demand growth and the emergence of corrugated as a highly sustainable transport and merchandising medium include : the substitution of plastic with paper-based packaging ; the significant growth in e-commerce ; and growing demand from discount retailers for shelf ready packaging.
Demand in Latin America, again according to the ICCA report, is projected to grow at a CAGR between 3.3% and 4.6% between 2017 and 2021.
With its market leading positions across Europe and as the only major pan-regional producer in Latin America, Smurfit Kappa is uniquely positioned to capitalise upon projected industry growth.
Liam O’Mahony, Chairman of Smurfit Kappa said “The Board of Smurfit Kappa has unanimously rejected this unsolicited and highly opportunistic Proposal. It does not reflect the Group’s true intrinsic business worth or its prospects. We delivered a record performance in 2017 and underlying trading momentum has continued into 2018. The Group has a proven management team which we believe will deliver significantly greater value for shareholders on a stand-alone basis. The Board believes that it is in the best interests of all stakeholders for the Group to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging. We strongly advise shareholders to take no action.”
In a release published on March 7, Smurfit Kappa « notes the announcement released on the evening of 6 March by International Paper Company setting out the price of the unsolicited and highly opportunistic proposal that was originally made to the Board of Smurfit Kappa on 23 February 2018 and rejected in the Group’s announcement of 6 March.
The Board of Smurfit Kappa has already carefully considered, with its financial advisers, the Proposal in detail and has unanimously rejected it on the basis that it fails entirely to reflect the Group’s superior prospects as an independent business and represents a valuation multiple significantly below recent comparable transactions. (…) This announcement is made without the consent of International Paper. There can be no certainty that any firm offer will be made, nor any certainty as to the terms on which any firm offer might be made by International Paper. »

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