International Paper Drops Buyout Proposal for Smurfit Kappa

International Paper Company IP has decided to cancel its proposal for the takeover of the Irish packaging company — Smurfit Kappa — due to lack of engagement from the latter’s management.

Memphis-based International Paper was given time until Jun 6 to make a binding offer for the buyout by the Irish Takeover Panel. The company confirmed that it has dropped its pursuit to acquire its Ireland-based rival.

It is worth noting that International Paper had made two takeover proposals in February and March, but both were rebuffed by Smurfit Kappa’s management, citing gross undervaluation. International Paper first valued Smurfit Kappa at €36.46 per share and the second at €37.54 per share or €8.9 billion.  

Also, in May, International Paper decided not to put across a hostile bid to acquire Smurfit Kappa and stressed the importance of proceeding on an agreed basis. It suggested that the two entities should meet to discuss the potential of the combined firm.

Per Ireland's rules, International Paper will be barred from making fresh attempts to acquire Smurfit Kappa for the next 12 months.

Nevertheless, International Paper remains focused on executing its operational strategy, which will boost shareholders’ value in the future.

The company continues to restructure itself to transform into a core packaging company. M&As remain a key strategy to strengthen its long-term business proposition.

It is taking initiatives to improve its operating margins over time across the business. The stock has outperformed the industry with an average return of 4% against a decline of 0.2% for the latter in the past three months.

International Paper currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Domtar Corporation UFS, KapStone Paper and Packaging Corporation KS and Stora Enso Oyj SEOAY. While Domtar and KapStone sport a Zacks Rank #1 (Strong Buy), Stora Enso carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Domtar has an expected long-term earnings growth rate of 5%. It exceeded earnings estimates thrice in the trailing four quarters with an average positive surprise of 18.7%.    

KapStone has an expected long-term earnings growth rate of 14%. It exceeded earnings estimates twice in the trailing four quarters with an average positive surprise of 12.9%.     

Stora Enso has an expected long-term earnings growth rate of 6.9%.

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International Paper Company (IP) : Free Stock Analysis Report
 
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