Smurfit Kappa’s unwanted suitor signals limited patience

Smurfit Kappa's unwanted suitor, International Paper (IP), has signalled that it has limited appetite to continue to pursue the Irish company if it continues to resist engaging on the possibility of a tie-up.

Management at IP have “suggested that uncertainty around a prospective transaction was unlikely to drag out”, analysts at Toronto-based BMO Capital Markets said in a note to clients following a recent visit to the Memphis-based group. They added that the “questions around deal status are unlikely to be an issue when second-quarter results are reported”.

Takeover proposals

The comments indicate that IP, which has seen two takeover proposals for Smurfit Kappa rebuffed since late February, is prepared to walk away by the time of its next quarterly results day at the end of July if the Dublin-based company does not succumb to its advances.

Smurfit Kappa is expected to face questions from shareholders on the matter at its annual general meeting in Dublin on Friday.

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IP chief executive “remains keenly interested in consummating a Smurfit Kappa transaction. However, in our opinion, there is a meaningful (30-35 per cent) chance that IP walk away,” the BMO analysts concluded.