Jefferson Smurfit will have to raise its offer to buy the outstanding 66 per cent of shares in Swedish packaging group Munksjo if it is to get the backing of the Munksjo board.
This follows the flat rejection of Smurfit's €243 million offer for the outstanding shares by the Swedish company's board.
The board said bluntly that the SKr77 a share offer from Smurfit was too low and did not reflect the value of Munksjo business and future potential.
The board's decision was inevitable after it emerged in the past week that Smurfit was not in a position to get the 90 per cent acceptances it had set itself for its bid. Munksjo's biggest institutional shareholder, SEB Fonder with 9.4 per cent, was the first to go public with its rejection and was followed by Swedish financier Sven Norfeldt who has a 2.2 per cent stake and said that the offer was too low.
An influential Swedish association of small shareholders also dismissed the Smurfit offer.
A spokesman for Smurfit said the group would not be commenting on the board's rejection while its offer was in progress. The Smurfit offer expires on March 12th but market sources said there was likely to be a low level of acceptances by the closing date. The boards' rejection of the Smurfit offer did not negatively affect Munksjo's shares which rose 50 öre to SKr83.50 on the Stockholm market, more than 6 cents above the Smurfit offer price.
In its statement, Munksjo chairman Mr Anders Carlsberg said the Smurfit offer made no allowance for Munksjo's fourth-quarter earnings, which were significantly higher than expected. He said Munksjo's full-year 2002 results were likely to be at the upper end of analyst forecasts.
Mr Carlsberg said the Smurfit offer valued Munksjo at a slight discount to medium-sized Nordic paper companies. Additionally, under the terms of the offer, Munksjo's shareholders would not receive the SKr3.25 dividend proposed by the board.
The chairman said Munksjo was in discussions on potential acquisitions in its core speciality paper business and that if one of these was concluded, a substantial earnings boost was possible.
