16th May 2018 18:30
LONDON (Alliance News) - Smurfit Kappa Group PLC welcomed the announcement by the Irish Takeover Panel providing a deadline for International Paper Co to make a binding offer for the Irish packaging firm as it reiterated its previous rejection of a deal.
Smurfit noted that International Paper confirmed it would not make a binding offer without agreement from the board of Smurfit. It added that it had rejected the US firms offers to date as being "significantly below" its view of the "true intrinsic worth and prospects" of Smurfit as well as remaining "significantly below the valuations set by recent industry transactions".
Smurfit also pointed towards it trading update earlier in May in which it saw "significant year-on-year improvement" across all key metrics in the first quarter of the year.
On Wednesday, Smurfit added second quarter trading remained "very encouraging". The company expected earnings before interest, tax, depreciation and amortisation in 2018 to be "materially better" than in 2017.
In 2017, Smurfit Kappa reported Ebitda of EUR1.24 billion on revenue of EUR8.56 billion. Pretax profit stood at EUR576.0 million.
Smurfit's comment came after International Paper said it has given until June 6 to announce whether or not to make a binding offer for the packaging firm, as it proposed a secondary London listing under its current offer.
In late March, Smurfit Kappa rejected a new bid from New York-listed International Paper. International Paper's offer amounted to EUR25.25 in cash, and 0.3028 new shares in the US for each Smurfit Kappa shares and valued the Irish firm at around EUR8.89 billion.
"International Paper believes its current proposal represents a compelling strategic and financial rationale for a combination with Smurfit Kappa," International Paper said in a statement Wednesday. "From the outset, IP has stressed the importance of proceeding on an agreed basis. To that end IP confirms that it will not proceed with a binding offer unless it is recommended by Smurfit Kappa's board of directors."
International Paper added it would seek a secondary listing in London should it acquire Smurfit Kappa "to enable Smurfit Kappa shareholders to share in the potential value created by a transaction".
The deal would also allow a mix-and-match facility for Smurfit shareholders, allowing them to elect to receive a greater or lesser proportion of cash under the offer.
"International Paper believes both companies should meet to discuss the synergy potential of the combined company and gain a better understanding of each company's current outlook, in order to explore a path forward to a recommended transaction," the company added.
Shares in Smurfit Kappa closed 5.1% lower at 2,946.00 pence on Wednesday.
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