Jefferson Smurfit has offered 2.24 billion Swedish krona (€243 million) in a takeover bid for Swedish paper firm, Munksjo. The Irish-based group already owns 33 per cent of the firm and wants to buy out the remaining 66 per cent.
The news came as Smurfit Stone Container, the US firm partly owned by the group, showed a further slump in profits in the fourth quarter, coming in below expectations on Wall Street.
Smurfit is offering shareholders SKr77 in cash for each Munksjo share, representing a 20 per cent premium on the last price at which the shares traded before the offer was presented. The price is 22 per cent better than the average closing price in the past 30 days.
Munksjo has been an associate company of the Smurfit group since 1995. Unveiling the bid yesterday, Smurfit said its offer aimed to simplify the overall group structure and was a "logical extension" of its interest in the Nordic market.
The bid was initiated without discussions with the firm and Smurfit hopes to conclude a deal in March. The offer is conditional on Smurfit becoming the owner of over 90 per cent of total Munksjo shares, but it reserves the right to implement a lower acceptance level.
Smurfit will finance the move from its cash and from credit facilities. The prospectus for the offer will be issued on February 18th, with the acceptance period expected to run to March 12th, 2002.
The three biggest shareholders in Munksjo are Swedish group SEB Funds, US firm Franklin Templeton Funds and Robur, a Scandinavian investment house.
Profits at Smurfit Stone shrank by 79 per cent in the last three months of 2001 to $14 million (€16.2 million). This compares with pre-tax profits of $67 million in the same period of 2000.
The group has blamed weak demand for packaging and low paper commodity prices for the sharp decline in profits. Sales for the period were $1.9 billion, compared with $2.2 billion in 2000. For the full year, the company reported after-tax income available to shareholders of $66 million, or 27 US cents per share, compared to $224 million, or 96 US cents, in 2000.
During the quarter, Smurfit Stone took 287,000 tons of economic downtime in its containerboard mill system to reduce inventory and manage working capital. The group's president and chief executive officer, Mr Patrick Moore, said Smurfit Stone had performed well, given weak demand for containerboard and corrugated containers.
"We recognised early that 2001 would be a difficult year for the packaging business and we reacted aggressively. We reduced capital spending and we successfully controlled operating and administrative costs," he said.
Smurfit Stone paid down $175 million in debt in the fourth quarter, and $376 million for the full year. Total debt was $4.96 billion at the end of the year, compared to $5.3 billion in 2000.
