Smurfit Kappa, Europe’s leading paper packaging firm based in Ireland, has reportedly rejected the acquisition proposal by The International Paper Company, a U.S. based pulp & paper firm. Reliable sources cite that this takeover bid was estimated at 9.5 billion Euros – more than what was actually offered to Smurfit earlier. Merely a few days ago, the U.S. firm had offered 25.25 euros in cash, more than its previous offers of 22 euros as well as 0.3 euros per new share of the company for every share of Smurfit it holds.
The firm rejected the new takeover proposal from International Paper as it considered that the revised acquisition proposal demonstrated an increase of less than 3 percent of the closing price of each share of International Paper. Smurfit reportedly viewed the revised takeover offer as undervaluing the firm and stated that the proposal is significantly below the industry valuation standards. However, the key officials of International Paper have stated that the company had actually viewed the revised purchase bid to be rather lucrative for shareholders of both International Paper as well as Smurfit. They further asserted that the firm was hoping for more constructive discussions with Smurfit.
In contrast to the views of the U.S. based International Paper, Smurfit believes that its deal with American pulp & paper firm will expose its investors to the risk of higher leverage & challenges of mixing two businesses from diverse cultures. Experts are of the opinion that the bid was the result of escalating demand for paper packaging arising from increasing consumer expenditure and the immense popularity of online shopping.
As per reports, Smurfit has announced that it wants to remain as an independent entity. Industry analysts in this regard, claim that the purchase of Smurfit would have actually helped International Paper to expand its business beyond the region of North America.