THE FRIDAY INTERVIEW: DERMOT SMURFIT, chairman of paper mill operator Powerflute, is on the prowl for a large-scale acquisition. He floated the firm on the Alternative Investment Market (Aim) last May to raise cash for a particular deal, but the seller wouldn't go the distance. "I couldn't unlock it," he says. Now he's back in the market again.

Smurfit says the company has enough fire-power to fund a €100 million-plus transaction, but concedes that the deal-making process is a two-way street. "You're never your own boss on an acquisition . . . I'll be disappointed if we haven't done an acquisition by the anniversary of the IPO, which is May 11th, but I've been disappointed before. We have a very, very big and vibrant deal flow right now."

A 40-year veteran of a sector often unloved by stock market investors, Smurfit was deputy chairman of Jefferson Smurfit until it was taken private in 2002 by Madison Dearborn.

After a lifetime in a business dominated by his better-known brother, Michael, many see his chairmanship of Powerflute as an opportunity to demonstrate his own commercial prowess.

But he disagrees that the role gives scope to finally call the shots. "I'm not sure that anybody ever really fully calls the shots," he says. "I'm not trying to run the business. It's run by [ Powerflute chief executive] Don Coates. I'm by no means trying to be an island and Michael was never an island in Jefferson Smurfit."

He fully agrees that he could have withdrawn from working life for good six years ago. But Smurfit says he's "a bit of a meanie", hates spending capital and has five children still at school. He could have retired altogether at the age of 58 "but then I'd be spending capital".

With all that in mind and as a 19 per cent shareholder in Powerflute, it follows that the sharp decline in Powerflute's share price is a matter of some dismay to him. The stock was floated at 110p but it has long since fallen below the £1 level. Undeterred by a 117 per cent rise to €12.5 million in pretax profits last year, the stock fell more than 4 per cent this week to some 67p.

"I can only tell you how disappointed I am at how the public markets have treated the company," he says, conceding that this sounds like any other chairman "bleating" about his share price.

Still, he is an ardent believer in the Powerflute investment case. The firm's mill is situated in Kuopio, Finland, an hour by plane from Helsinki. It makes a niche product called Nordic semi-chemical, essentially the "squiggly" cardboard fluting between the outer and inner boards of corrugated boxes.

This product, which is especially robust, is mainly used for the international transportation of fruit and vegetables. The global market for the stuff amounts to some 900,000 tonnes per year. Powerflute makes some 260,000 tonnes and has two main competitors, Finnish group Stora Enso and Swedish firm Bilerud.

"We see ourselves as a bit recession-proofed as 90 per cent of our business is in food. In a recession, people still eat," Smurfit says. What is more, he argues that there is little scope for new competition in the sector. "We have no growth in product in the sense that there's no new mills, there will never be."

While Powerflute is capitalised at €80 million and has an enterprise value of €100 million, building a new plant would cost €400 million. Smurfit says this wouldn't make financial sense given the limited market for the product.

He came to the business in 2004, but not by design. The opportunity was brought to his attention at a partridge-shoot in Portugal - "half-way between Lisbon and the Algarve" - when he met Joukko Jakkola, then chief of packaging giant M-real. "He asked me: 'You've retired from Smurfit, what are you going to do?' I said: 'My natural position in life is to buy unwanted assets' and he said: 'I have one of those.'"

This chat culminated in a deal at the very start of 2005 when Smurfit led a consortium that bought over the Savon Sellu mill for €30 million "including everything". His backers included financier Alan Dargan and his brother Michael, who was for decades the dominant figure in Jefferson Smurfit. Another brother, Alan, and "various other friends" were also involved.

While plant is likely to produce more than €20 million in earnings before interest tax deprecation and amortisation (Ebitda) this year, it was in a bad way when Smurfit took over. "There were a lot of rumours at the time. I was seen as a white knight. It was losing money at the ebitada level of €3 million per year," he says.

"We went about transforming the mill. Tonnage output grew from 220,000 to 261,000 in 2007, headcount came down from 260 to 180 and we transformed quality standards, absenteeism, purchasing, transport and the customer base . . . It just makes more of it better, more productively and more profitably. Today we have a very vibrant and successful business from what was a business at death's door."

For all his disappointment at Powerflute's share price performance since, Smurfit realised a handsome £18.39 million in the flotation when reduced his stake by half. He won't countenance taking the business off the public markets now - "at these stock prices I'm not a seller" - and will concentrate on acquisitions in the near future.

"All the big paper companies are asked to improve their returns to shareholders. As a result they're starting to focus on what is their core business and getting rid of orphan or non-core assets. And those are the opportunities for us," he says.

"We have some potential deals that have synergies with Powerflute as it currently stands, we have others that don't."

There are no plans to link Powerflute with PankaBoard, a privately-held mill operator in Finland which Smurfit and some of his associates bought out in 2006. "It's a private company and therefore will remain private."

As an heir to the business set up by his father, Smurfit has spoken in the past about his disappointment at the decision to take Jefferson Smurfit private. While citing his pride in the expansion of the business from the 1960s onwards, he says now that there was "no point" in being on the stock market. "Nobody wanted to know," he says. "The share price had totally stalled if somebody bought in from '96/'97 onwards, hence the decision to take the company off the market."

He saw himself as a natural successor to his brother - "I think the board saw me as the natural successor. I was chairman designate of the company, that's the way it was" - but insists his retirement was not far away. "Michael was going to go out with his boots on. I was going to retire at 60. Retiring at 58 was perfect timing."

So no regrets? "Quite the contrary. I think there's a time in everybody's life. I was actually quite excited. I felt there'd be lots and lots of things for me to do. I retired on a Friday and on Monday expected phones ringing incessantly with people looking for my expertise . . . Nobody cared less. It was just one big yawn and it took me nearly a year and a half to develop my next career."

He recently caused a stir in London, where he has lived for the past 20 years, when he made public his discontent at proposed changes to the law on tax charges for non-domiciled residents. But he won't talk about that now.

"I don't want to say anything more about it, good bad or indifferent," he says.

I retired on a Friday and on Monday expected phones to be ringing with people looking for my expertise . . . Nobody cared less.

ON THE RECORD

Name:Dermot Smurfit

Age: 63

Job:Chairman of Powerflute, an Aim-listed operator of a paper mill in Finland.

Career to date: He spent most of his working life at Jefferson Smurfit, the packaging company set up by his late father in 1934. "We were the first people to say we could export our brains rather than just our brawn," he says. He was joint deputy chairman of the firm for eight years, chairman/ chief executive of its European unit and director of sales and marketing worldwide. After Jefferson Smurfit he was chairman of two other Aim-listed firms, electronic point-of-sale company Anker and financial services firm Peach Holdings.

Family:Married to Geraldine Smurfit, they have five children between the ages of 7 and 15. He has two children from his first marriage: Victoria, an actress; and Dermot, a director of online gaming firm GameAccount.

Something you might expect: He plays golf but is "terrible" at the game.

Something that might surprise: He is a freeman of the city of London.