Smurfit Kappa reaffirms guidance after International Paper drops bid
06/06/2018 08:31
DUBLIN, June 6 (Reuters) - Smurfit Kappa SKG.I reaffirmed
its guidance on Wednesday that its full year earnings will be
materially better than last year after rival International Paper
IP.N (IP) decided to end its pursuit of the Irish packaging
company.
Smurfit twice frustrated a bid to combine the largest listed
U.S. paper packaging firm with Europe's biggest, arguing it was
better served pursuing its future independently. IP's second,
raised offer valued the Irish group at 8.9 billion euros ($10.5
billion).
IP walked away on Tuesday, blaming a lack of engagement from
Smurfit's management. Under Irish takeover rules, the
Memphis-based group is barred from making a fresh attempt to buy
Smurfit for 12 months. urn:newsml:reuters.com:*:nL5N1T76E8
"The board believes that SKG has superior prospects as a
standalone business and remains excited about the group's
prospects in the short, medium and long-term," Smurfit said in a
statement, adding that it expected the second quarter to
represent another strong performance.
David O'Brien, an analyst at Goodbody Stockbrokers, said
that given IP is one of the few packaging companies capable of
launching a bid for Smurfit, the Irish group is likely to stay
as an independent company for now.
Shares in Smurfit, which fell sharply earlier this week,
were 2.3 percent higher at 34 euros by 0720 GMT. The shares hit
a high of 37.10 euros during IP's pursuit but are well up on the
28.60 euros they stood at before the initial bid.
The second bid was pitched at 37.54 euros per share.
Smurfit agreed last month to buy Dutch paper and recycling
firm Reparenco for 460 million euros and said on Wednesday that
it was targeting synergy benefits in excess of 30 million euros
from the deal, a disclosure it was forbidden from making at the
time under takeover rules.
It also laid out a four-year plan in February to increase
investment in its existing businesses by 1.6 billion euros.
Elsewhere in the sector, UK-based DS Smith Plc SMDS.L this
week offered to buy Spanish rival Europac ECP.PA for 1.9
billion euros ($2.2 billion) including debt to bolster its
position in western Europe's fast-growing packaging market.
urn:newsml:reuters.com:*:nL5N1T60SK
Ireland's Davy Stockbrokers increased its forecast for
Smurfit Kappa's full year core earnings by 6 percent for 2018
and 5 percent for 2019, reflecting the recent acquisition and
strong underlying fundamentals in the sector.
It also increased its price target for the stock to 42
euros, above the 37.50 euros per share International Paper bid.
"It is little wonder therefore that SKG's Board rejected the
proposal from International Paper," Davy analyst Barry Dixon
wrote in a note.
($1 = 0.8511 euros)
(Reporting by Padraic Halpin
Editing by Keith Weir)
((padraic.halpin@thomsonreuters.com; +353 1 500 1529; Reuters
Messaging: padraic.halpin.thomsonreuters.com@reuters.net))