Irish-headquartered paper and packaging firm Smurfit Kappa holds its annual general meeting in Dublin this morning, where the topic of International Paper's €9 billion rejected takeover bid is likely to be raised. The company also issued a trading statement for the first three months of the year, which revealed growing revenues and an update on its medium-term strategy.

"These were very good results - profits up by 22% to €340m and a return on capital employed at a new record high," said Gerard Moore, head of Irish research at Investec. "I think the tone of the statement is clearly emphasising how the company is well positioned in itself. It talks about how it has a unique team and how it is looking for a positive outcome in both the short, medium and long terms." 

Gerard Moore said the company was clearly trying to show how strong it is on its own, but it also understands that it cannot ignore the right offer. "It's definitely talking up its own position, but having said that I think Smurfit Kappa also recognise that it is a PLC, it has a fiduciary duty to its shareholders and it will have to put them first," he said.

International Paper's first bid became public knowledge in early March, with an improved offer coming in towards the end of that month. Both were rejected and things have been relatively quiet since then, though it is claimed that the US firm has been making its case to shareholders behind the scenes. 

The two companies will also be reassessing their respective positions relative to their most up-to-date results, Mr Moore said. "Both sides have been trying to assess the lay of the land," he said. "They've probably been talking to their advisors, talking to investors and trying to understand in a bit more detail how the other side is positioned. "We've obviously had company results now both from Smurfit Kappa and International Paper - with those you get more up-to-date financial information and in turn both sides, and particularly IP, can reassess the situation and decide on their next move."

In its results, International Paper made it clear that it was still interested in acquiring Smurfit Kappa but said it had other options available should the deal fail to progress. More recent soundings have suggested that it may want a resolution one way or another before the end of July. 

Mr Moore said he expects that will be achieved as the courting period is unlikely to drag out for many more months - but there is still more to come before a resolution is found. "There's obviously a lot of positioning from both sides in this," he said. "When you look at the facts, IP hasn't walked away and, by definition, if they haven't walked away then they're still interested in Smurfit Kappa. I think this probably has a bit more to play out."

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