MEMPHIS, Tenn., March 6, 2018 /PRNewswire/ -- Further to the
announcement by Smurfit Kappa Group plc ("Smurfit Kappa"),
International Paper Company (NYSE: IP) confirms that it has
submitted a proposal to acquire the entire issued and to be issued
share capital of Smurfit Kappa (the "Proposal"). Under the
terms of the Proposal, Smurfit Kappa shareholders would be entitled
to receive €22.00 in cash and 0.3028 new International Paper shares
of common stock for each Smurfit Kappa ordinary share held by
them.
Based on International Paper's closing share price of
$58.94 as at 5
March 2018 and a €:$ exchange rate of €1:$1.2343, the Proposal values each Smurfit Kappa
ordinary share at €36.46. This represents a premium of
approximately:
- 27.4 per cent. to Smurfit Kappa's closing share price of €28.62
on 5 March 2018 (being the last
business day prior to the release of the announcement);
- 28.4 per cent. to Smurfit Kappa's volume weighted average share
price of €28.41 since its Full Year Results on 7 February 2018;
- 30.2 per cent. to Smurfit Kappa's closing share price of €28.00
on 13 February 2018 (being the last
business day prior to International Paper's initial approach to
Smurfit Kappa); and
- 22.5 per cent. to Smurfit Kappa's all-time high share price of
€29.76 on 20 February 2018.
In aggregate, the Proposal values Smurfit Kappa's current issued
share capital at approximately €8.6 billion and would provide
Smurfit Kappa shareholders with a shareholding of approximately 15
per cent. in International Paper post-completion (calculated by
reference to the number of International Paper shares of common
stock in issue as at 5 March
2018).
International Paper notes the comments that Smurfit Kappa
believes the Proposal is highly opportunistic. Given that Smurfit
Kappa announced record EBITDA on 7 February
2018 and recorded an all-time high share price of €29.76 on
20 February 2018, International Paper
does not agree with this characterisation. Indeed, by submitting
the Proposal after the release of Smurfit Kappa's Full Year Results
and the Medium term Outlook ("MTO"), International Paper was able
to take account of this information (and the market's reaction to
it) when making its approach. Moreover, International Paper
believes that the Proposal provides Smurfit Kappa shareholders with
the opportunity to crystalise value for their holdings in the near
term (via the Proposal's cash component) and also retain ongoing
upside in the value creation of the transaction (via the Proposal's
share component).
International Paper believes that the transaction, if
consummated, would be an excellent strategic fit that creates
long-term value for both Smurfit Kappa and International
Paper. The enlarged group would constitute a premier global
packaging company that would be able to serve both local and global
customers more effectively. The transaction would also create
an opportunity to realise meaningful synergies through enhanced
efficiencies.
International Paper takes a disciplined approach to acquisitions
with clearly defined strategic and financial criteria. Any
offer would have to meet our objectives of earnings per share
accretion, free cash flow generation and a return on invested
capital exceeding International Paper's weighted average cost of
capital, while enabling International Paper to remain committed to
a strong balance sheet over the long term.
Chronology
On 14 February 2018, International
Paper approached Smurfit Kappa and requested a meeting so that
International Paper could put forward a specific proposal to
Smurfit Kappa. Following further communication, initiated by
International Paper, a meeting was arranged on 23 February 2018. At the meeting, on 23 February 2018, International Paper delivered
the Proposal and provided a written letter to be delivered to the
Smurfit Kappa board of directors (the "Smurfit Kappa Board").
Last night the Proposal was rejected by the Smurfit Kappa Board.
International Paper is disappointed that this was made public this
morning, prior to further engagement between the parties to discuss
the value creation potential of the transaction. Nonetheless,
International Paper remains ready to engage with Smurfit Kappa's
Board and shareholders to discuss both the merits of its Proposal
and the reasons why International Paper believes it provides the
best near and long term value for Smurfit Kappa shareholders.
Reservations
International Paper reserves the right to:
- introduce other forms of consideration and/or, subject to the
consent of the Irish Takeover Panel, to vary the composition of the
consideration referred to above;
- implement the transaction through or together with a subsidiary
of International Paper or a company which will become a subsidiary
of International Paper;
- announce an offer (including a cash offer and/or a share offer)
for Smurfit Kappa on less favourable terms than those set out in
the Proposal:
-
- with the agreement or recommendation of the Smurfit Kappa
Board;
- if a third party announces an offer or firm intention to make
an offer for Smurfit Kappa on less favourable terms; or
- following the announcement by Smurfit Kappa of a whitewash
transaction pursuant to the Irish Takeover Rules on less favourable
terms; and/or
- in the event that any dividend or other distribution is
announced, declared, made or paid by Smurfit Kappa, reduce the cash
and/or share component of its offer by the gross amount of such
dividend or other distribution.
This announcement does not amount to a firm intention to make an
offer for Smurfit Kappa under Rule 2.5 of the Irish Takeover Rules
and, accordingly, there can be no certainty that any offer will be
forthcoming. The Proposal was made on an indicative and
non-binding basis.
A further announcement will be made as and when
appropriate.
About International Paper
International Paper (NYSE:
IP) is a leading global producer of renewable fiber-based
packaging, pulp and paper products with manufacturing operations in
North America, Latin America, Europe, North
Africa, India and
Russia. We produce corrugated
packaging products that protect and promote goods, and enable
world-wide commerce; pulp for diapers, tissue and other personal
hygiene products that promote health and wellness and papers that
facilitate education and communication. We are headquartered in
Memphis, Tenn., and employ
approximately 52,000 colleagues located in more than 24 countries.
Net sales for 2017 were $22 billion.
For more information about International Paper, our products and
global citizenship efforts, please visit
internationalpaper.com.
Rule 2.10 disclosure
In accordance with Rule 2.10 of the Irish Takeover Rules,
International Paper announces that, as of the close of business on
5 March, 2018, it had 414,093,598
shares of common stock of par value $1.00 each in issue ("Common
Stock"). The International Securities Identification
Number for the Common Stock is US4601461035.
International Paper confirms that, as of the close of
business on 5 March, 2018, it had
6,181,285 contingent awards of common stock outstanding through its
Performance Share Plan which, upon vesting, would entitle holders
to receive up to a maximum of 6,181,285 units of Common Stock,
assuming satisfaction of the applicable performance criteria at
maximum performance. International Paper further confirms that, as
of the close of business on 5 March,
2018, it had 173,704 awards of common stock outstanding
through its Restricted Stock Award program which, upon vesting,
entitle holders to receive up to a maximum of 173,704 units of
Common Stock.
The Directors of International Paper accept responsibility
for the information contained in this announcement. To the best of
their knowledge and belief (having taken all reasonable care to
ensure that such is the case), the information contained in this
announcement for which they accept responsibility is in accordance
with the facts and does not omit anything likely to affect the
import of such information.
A person interested in (as defined in the Irish Takeover
Rules) 1% or more of any class of relevant securities of Smurfit
Kappa or International Paper may have disclosure obligations
under Rule 8.3 of the Irish Takeover Rules, effective from the date
of this announcement. Such disclosures should be publicly disclosed
by no later than 3.30pm (Irish/UK
time) in respect of the relevant securities of Smurfit Kappa and
3.30pm (New
York time) in respect of the relevant securities of
International Paper on the business day following the date of the
relevant transaction. The requirement will continue until the offer
period ends. If two or more persons co-operate on the basis of any
agreement, either express or tacit, either oral or written, to
acquire an interest in relevant securities of either Smurfit Kappa
or International Paper, they will be deemed to be a single person
for the purposes of Rule 8.3 of the Irish Takeover Rules.
Under Rule 8.1 of the Irish Takeover Rules, all dealings in
relevant securities of Smurfit Kappa by International Paper, or
relevant securities of International Paper by Smurfit Kappa, or by
any party acting in concert with either of them must also be
disclosed by no later than 12 noon (Irish/UK time) in respect of
the relevant securities of Smurfit Kappa and 12 noon (New York time) in respect of the relevant
securities of International Paper on the business day following the
date of the relevant transaction. Interests in securities arise, in
summary, when a person has a long economic exposure, whether
conditional or absolute, to changes in the price of securities. In
particular, a person will be treated as having an interest by
virtue of the ownership or control of securities, or by virtue off
any option in respect of, or derivative referenced to, securities.
Terms used in this paragraph should be read in light of the
meanings given to those terms in the Irish Takeover Rules. If you
are in any doubt as to whether or not you are required to disclose
dealings under Rule 8, please consult with the Irish Takeover
Panel's website at www.irishtakeoverpanel.ie or contact the Irish
Takeover Panel by telephone on +353 1 678 9020.
This announcement is not intended to, and does not,
constitute or form part of any offer, invitation or the
solicitation of an offer to purchase, otherwise acquire, subscribe
for, sell or otherwise dispose of, any securities whether pursuant
to this announcement or otherwise.
The distribution of this announcement in jurisdictions
outside Ireland may be restricted
by law and therefore persons into whose possession this
announcement comes should inform themselves about, and observe,
such restrictions. Any failure to comply with the restrictions may
constitute a violation of the securities law of any such
jurisdiction.
Deutsche Bank AG is authorised under German Banking Law
(competent authority: European Central Bank) and, in the
United Kingdom, by the Prudential
Regulation Authority. It is subject to supervision by the European
Central Bank and by BaFin, Germany's Federal Financial Supervisory
Authority, and is subject to limited regulation in the United Kingdom by the Prudential Regulation
Authority and the Financial Conduct Authority ("FCA").
Details about the extent of its authorisation and regulation by the
Prudential Regulation Authority, and regulation by the FCA, are
available on request or from
www.db.com/en/content/eu_disclosures.htm. Deutsche Bank
Securities Inc ("DBSI") is acting as financial adviser
and Deutsche Bank AG, acting through its London Branch (together with DBSI,
"Deutsche Bank"), is acting as financial adviser and
corporate broker to International Paper and no other person in
connection with this Announcement or any of its contents. Deutsche
Bank will not be responsible to any person other than International
Paper for providing any of the protections afforded to clients of
Deutsche Bank, nor for providing any advice in relation to the
Acquisition or any other matter referred to herein. Neither
Deutsche Bank nor any of its affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Deutsche Bank in connection with this
Announcement, any statement contained herein or otherwise.
No statement in this communication is intended to constitute
a profit forecast for any period, nor should any statements be
interpreted to mean that earnings or earnings per share will
necessarily be greater or lesser than those for the relevant
preceding financial periods for Smurfit Kappa or International
Paper as appropriate. No statement in this communication
constitutes an asset valuation. No statement in this communication
constitutes an estimate of the anticipated financial effects of an
acquisition of Smurfit Kappa, whether for Smurfit Kappa or
International Paper.
Publication on a website
In accordance with Rule 19.9 of the Irish Takeover Rules, a
copy of this announcement will be published on the International
Paper website (www.internationalpaper.com) by no
later than 12 noon on the business day following this announcement.
The content of the website referred to in this announcement is not
incorporated into and does not form part of this
announcement.
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SOURCE International Paper