Smurfit Kappa (SKG) share price drops as it rejects another takeover approach from International Paper saying it doesn’t make “strategic sense”
Smurfit Kappa said this morning it had rejected a fresh offer from International Paper, saying it failed to reflect the company’s “intrinsic value, track record and superior prospects as an independent business”.
Under the terms of the revised proposal, Smurfit Kappa shareholders would receive €25.25 in cash, which the company said would be reduced to €24.605 after payment of the final dividend of 64.5 cent.
Shares in Smurfit Kappa dropped nearly three per cent in early trading.
Smurfit Kappa said the rejigged offer still includes a significant proportion of the consideration in the form of International Paper shares which are US-listed, and represent uncertain value, exposing Smurfit Kappa shareholders to the risk of “significantly greater leverage”, as well as the challenges of integrating two firms with distinct cultures.
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Liam O’Mahony, chairman of Smurfit Kappa, said:
The revised proposal does not offer Smurfit Kappa shareholders much more than compensation for the fall in International Paper’s share price since that date and again entirely fails to value the group’s true intrinsic business worth and future prospects. We delivered a record performance in 2017 and underlying trading momentum has continued into 2018.
Moreover, the revised proposal does not make strategic sense for Smurfit Kappa and its stakeholders. Smurfit Kappa has a distinct business model and culture as a customer-oriented, performance-led packaging leader and has already communicated a strong plan to accelerate development and performance with its 2017 year-end results.
Shareholders have been “strongly advised” to take no action with respect to the revised proposal in an announcement this morning, made without the consent of International Paper.
Earlier this month, the packaging company spurned an approach from its US based rival, branding it “unsolicited and highly opportunistic”.
International Paper had made a proposal to acquire the company, with shareholders receiving a combination of cash and a minority stake in the enlarged company.
Read more: Paper wars: “Take no action” Smurfit tells shareholders