Brazil's Suzano readies $15 billion bid for International Paper, sources say
07/05/2024 21:54
(Adds statement from International Paper, share movement,
paragraphs 4-7)
By Anirban Sen
NEW YORK, May 7 (Reuters) - Brazilian pulp and paper
company Suzano SUZB3.SA has approached U.S.-based
International Paper IP.N to express interest in an all-cash
acquisition that would be worth almost $15 billion, according to
people familiar with the matter.
The approach comes less than a month after International
Paper agreed to buy British packaging firm DS Smith SMDS.L for
$7.2 billion, beating out a rival bid from London-listed Mondi
MNDI.L . This deal, which is scheduled to close by the fourth
quarter of 2024, could be disrupted were Suzano to press ahead
with its bid for Memphis-based International Paper.
Suzano has communicated its $42-per-share offer to
International Paper's board of directors verbally, and could
submit a formal bid in the coming days, according to the
sources, who spoke on condition of anonymity. International
Paper is poised to reject Suzano's offer as inadequate, one of
the sources said.
International Paper's shares jumped as much as 12% on the
news before paring some gains earlier on Tuesday, giving the
company a market capitalization of about $13.5 billion. Its
shares closed up more than 5%.
Shares of Suzano, which has a market value of 77.6 billion
reais ($15.33 billion), closed down more than 12% in Brazil. DS
Smith's shares in London fell as much as 7.3% before reversing
most of those losses to close down about 1%.
Suzano, the world's largest pulp manufacturer, is in talks
to line up debt financing to support its bid, and has informed
International Paper that the offer would be conditional on the
latter abandoning its deal with DS Smith, the sources said.
International Paper declined to comment on Suzano's
approach, saying that the company continues to focus on
completing its deal for DS Smith.
"The IP team, led by new CEO Andy Silvernail, is executing
on business strategies and pursuing commercial and cost
improvement initiatives across the portfolio to achieve
best-in-class profit margins and significant earnings growth. In
addition, as industry conditions continue to improve, IP will
come out of a cyclical bottom for earnings," International Paper
said in a statement.
Suzano declined to comment.
The packaging industry had benefited from a surge in demand
during the COVID-19 pandemic as consumers placed more orders
through e-commerce sites during worldwide lockdowns. But as
e-commerce growth returned to more normal levels after lockdowns
were lifted, the sector turned to dealmaking to maintain growth.
Last year, Ireland-based Smurfit Kappa SKG.I agreed to
combine with U.S.-based WestRock WRK.N in a deal worth $20
billion.
International Paper said last month its tie-up with DS Smith
would extend its reach in Europe and deliver annual pre-tax cash
synergies of at least $514 million. Combining with International
Paper would allow Suzano to expand in packaging.
Suzano is in the middle of a CEO transition. It has tapped
Joao Alberto Fernandez de Abreu, the former head of rail
operator Rumo RAIL3.SA , as its new CEO to replace Walter
Schalka, who led the company for 11 years.
In February, Suzano reported a 39% fall in its
fourth-quarter net profit from a year earlier as lower pulp
prices hurt revenue.
($1 = 5.0758 reais)
(Reporting by Anirban Sen in New York, additional reporting by
Alberto Alerigi Jr. and Peter Siqueira in Sao Paulo; Editing by
Will Dunham)
((Anirban.Sen@thomsonreuters.com; Twitter: @asenjourno; Reuters
Messaging: Signal/Telegram/Whatsapp - +1-646-705-9409))