Madison Dearborn has cleared the final legal hurdle in efforts to render its bid for Jefferson Smurfit unconditional.

The High Court yesterday approved an application by Jefferson Smurfit to reduce share capital in the paper and packaging company, thus effecting the spin-off of a 29 per cent stake in US associate Smurfit Stone Container Corporation (SSCC).

This approval was required for Madison Dearborn's €3.4 billion takeover offer for the company to be declared unconditional.

Mr Justice Peter Kelly also approved of next Tuesday, September 3rd, as the closing date for the deal.

This means that Smurfit shareholders can expect to receive cash in respect of their holdings within the next month. Shareholders are due €2.15 for every share they own, as well as one share in SSCC for every 16 they hold in the core group.

Although the High Court had earlier been told that Jefferson Smurfit did not expect any opposition from shareholders or creditors to the takeover deal, it was opposed in court yesterday by one shareholder, Mr Kevin Anderson, who objected on technical grounds in relation to a poll of shareholders that had been taken at an extraordinary general meeting held last month.

Judge Kelly said he had not been satisfied Mr Anderson had demonstrated either on the facts or in law any basis on which the court should withhold its approval to the takeover.

Mr Bill Shipsey, S.C., counsel for Smurfit had earlier told the court that shareholders had voted with their feet in favour of reducing share capital by 10 million ordinary shares to facilitate the takeover.

At the general meeting in July, 99.6 per cent of shareholders either in person or by proxy voted in favour of the Madison Dearborn offer.

Yesterday's approval marked the effective end of a takeover process that has lasted almost 12 months. The court heard that in autumn last year, Chicago-based Madison Dearborn approached Jefferson Smurfit regarding a possible takeover bid and that the two parties had held discussions until February this year.

On June 17th, MDCP Acquisitions I, an Irish-registered unlimited company formed for the specific performance of the takeover, had announced it was making an offer to acquire the entire issued share capital of Jefferson Smurfit. The independent directors of the company decided to recommend acceptance of the offer and a formal offer was issued on July 5th.