Smurfit's shareholders get chance to comment on proposed takeover

Shareholders in paper and packaging group Jefferson Smurfit today get their first chance to have a say on the proposed €3.7 billion takeover by Madison Dearborn Partners. The group holds an extraordinary general meeting (e.g.m,) to approve two resolutions without which the deal cannot go ahead.

In the first, shareholders will be asked to approve the spin-off of the group's 29.3 per cent stake in Smurfit Stone Container Corp in the US. The move requires the approval of three-quarters of those voting at the meeting in the Burlington Hotel in Dublin or who have submitted proxies.

The second motion before the meeting sanctions management participation in the takeover of the company. It requires the support of a simple majority of those voting.

The structure of the Madison Dearborn bid requires the involvement of some of the group's existing senior management and the passing on the Smurfit Stone shares to Smurfit shareholders in part-payment of the takeover.

Despite last week's bounce in the price of Smurfit Stone following better-than-expected results for its second trading quarter, that part of the deal is worth less than the €1.11 per share attributed to it in the €3.26 per share Madison Dearborn offer. However, the bid is still worth more than the current €2.86 value of Smurfit shares on the Dublin exchange.

Fifty-four per cent of Smurfit shareholders are based in the United States and their shares will not have been affected by the fall in the dollar/euro exchange rate.

Advisers to Smurfit indicated towards the end of last week that the level of proxies recieved ahead of the e.g.m. had been high.

The next key date for the Madison Dearborn offer is August 6th, which is the first closing date ofr acceptances. The company, which has recommended the bid, requires 80 per cent approval for the offer to become unconditional.