The US-based company which proposed a deal to acquire Smurfit Kappa has said the transaction would have been an "excellent strategic fit" for both companies.
Smurfit Kappa rejected what it described as a "fundamentally opportunistic" unsolicited proposal from International Paper Company.
Smurfit Kappa, Europe's largest producer of paper-based packaging, said the proposal failed "entirely to reflect the group's strong growth prospects and attractive industry outlook".
In a statement released this evening, International Paper said it did not agree with the characterisation that its proposal was opportunistic.
It said the enlarged group would constitute "a premier global packaging company" that would be able to serve both local and global customers more effectively.
International Paper said under the terms of its 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.
It said its 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% in International Paper post-completion
Earlier this evening, shares in Smurfit Kappa closed up 18% to €33.86 after it rejected the deal.
Liam O'Mahony, Chairman of Smurfit Kappa, said that the company's board had unanimously rejected the unsolicited and highly opportunistic proposal.
"It does not reflect the group's true intrinsic business worth or its prospects.
"We delivered a record performance in 2017 and underlying trading momentum has continued into 2018. The group has a proven management team which we believe will deliver significantly greater value for shareholders on a stand-alone basis," the chairman said.
He said the Smurfit Kappa board believes that it is in the best interests of all stakeholders for the group to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging.
He also strongly advised shareholders to take no action.
Smurfit Kappa, which operates in 34 countries in Europe and the Americas, recorded a slight rise in full-year earnings to €1.24 billion last year after a strong fourth quarter.
It said today that the underlying positive trading conditions had continued into 2018.
As part of its full-year results, it announced an acceleration of its investment programme that it said would improve its market position between 2018 and 2021.
International Paper's market capitalisation is almost three times that of Smurfit Kappa at $24.1 billion.
The Memphis-based group combined its North America consumer packaging business with Graphic Packaging Holding in a deal that valued the International Paper division at $1.8 billion.
Shares in paper and packaging companies have far outperformed the wider European market in recent years as growing consumer spending and the explosion of online retail spurred demand for packaging.
Goodbody Stockbrokers said the combination made strategic sense given complementary businesses in Latin America and the opportunity for International Paper to build on its small position in Europe where it has a 4% market share.
