Yahoo Finance International Paper drops pursuit of UK-listed Smurfit Kappa
International Paper has walked away from takeover talks with Smurfit Kappa, citing the cardboard company's "lack of engagement" after it rebuffed two earlier approaches by the American giant.
International Paper, which is the largest listed paper packaging firm by sales in the US, had until tomorrow morning to make a firm offer or walk away, but confirmed this evening it would be dropping its pursuit of Smurfit.
Its chairman and chief executive Mark Sutton said: "While we continue to believe in the strategic and financial potential of this combination, our commitment was to proceed in a disciplined manner that would create value for both sets of shareholders."
International Paper had already ruled out launching a hostile bid, saying it would not proceed unless the offer was recommended by Smurfit's board.
Smurfit, which trades in both Dublin and London, had rebuffed International Paper's two earlier takeover proposals as "fundamentally undervaluing" its operations, although in recent weeks had faced mounting pressure from major shareholders to enter into talks with the American business.
International Paper's most recent bid, in late March, valued Smurfit at €8.9bn (£7.8bn) not including debt, but Smurfit chairman Liam O'Mahony had claimed this proposal "entirely fails to value the group’s true intrinsic business worth and future prospects".
Shares in Smurfit have risen around 16pc since it was first approached by International Paper, although wavered earlier today as rumours swirled that a bid could be abandoned. On its Tuesday closing price, its market capitalisation was £6.9bn.
Under Irish rules, International Paper will be unable to make another attempt to buy Smurfit for 12 months.
The US company, which employs around 52,000 people across the globe, had been thought to be pursuing a deal in order to gain a stronger foothold in the lucrative European market, which has seen a wave of consolidation in recent months.
Earlier this week, DS Smith announced plans to buy Spanish rival Europac in a £1.45bn deal, and Smurfit completed its own deal last month, buying Dutch company Reparenco.
