International Paper Unlikely to Tender Fresh Bid for Smurfit Kappa Assets

SEATTLE (Scrap Monster): International Paper (IP) is unlikely to submit fresh bid for the rival Smurfit Kappa assets. This is in accordance with the latest analyst report published by the French brokerage firm Exane BNP Paribas. It must be noted that the one-year ban on making fresh bid, as per Irish takeover rules had expired last month.

Analysts Justin Jordan and Julien Ouaddour, in their report, stated that a re-bid is unlikely in the near term, mainly on account of notable decline in IP’s stock price due to declining demand for boxes in the U.S. However, the report notes that another merger attempt could be possible on a 3-5 year view. Incidentally, the stocks of both Smurfit Kappa and IP have fallen drastically by nearly one-fourth since the time when Smurfit Kappa turned down the initial bid offered by IP, almost thirteen months back.

ALSO READ: Smurfit Kappa Reported Strongest Ever Annual Profits in 2018

The report predicts stability in containerboard prices in the near term. Also, demand for packaging is likely to witness notable improvement in the second half of the current year.

International Paper had made two takeover proposals in February and March of 2018, both of which were rejected. Following this, IP had decided to end its pursuit, citing lack of engagement from Smurfit Kappa’s management.

In early-2018, Smurfit Kappa had announced its decision to spend €1.6 billion towards expanding its business and acquiring rival businesses over a period of four years. Accordingly, it acquired Dutch company Reparenco for a sum of €466 million. It also reported several smaller purchases in several countries including France, Bulgaria and Serbia.