Jefferson Smurfit's €243 million (£191 million) bid to buy out the 66 per cent of Swedish packaging group Munskjo that it does not already own has run into trouble after Munksjo's biggest shareholder rejected Smurfit's offer of 77 Swedish kroner a share.
Smurfit's bid to buy out the remaining shares is part of a strategy to rationalise its operations and eliminate minority shareholdings. But the decision by SEB Funds, which owns 9.4 per cent of Munksjo, to flatly reject Smurfit's offer as too low has serious implications especially if its decision is followed by the other big institutional shareholders - American investment house Franklin Templeton and the Swedish investment group Robur. Franklin Templeton's thinking, however, may be influenced by its sizeable stake in Smurfit itself.
Smurfit's offer is conditional on getting 90 per cent acceptances from Munksjo shareholders, but that may not be achieveable now that a 9.4 per cent holding has come out publicly against the offer.
Smurfit has, however, reserved the right to implement a lower acceptance level although it is not clear what level of acceptances will be needed for Smurfit to compulsorily acquire outstanding shares.
Munksjo's shares have been trading firmly above Skr80 since Smurfit announced its unsolicited bid and the market seems to be indicating that the Irish group will have to increase its offer to somewhere around Skr85. This would mean Smurfit having to pay €268 million to acquire the Swedish company.
The Munskjo board has appointed Lazard to advise it on the Smurfit offer and will issue a recommendation to shareholders next Friday. Industry sources believe the board will reject the Smurfit offer as too low but will leave the door open for Smurfit to increase its offer to overcome the objections of SEB and any other shareholders unhappy with the current offer. The Smurfit offer is open until March 12th.
Meanwhile, Smurfit shares continued their strong run in the wake of the recent results and traded up five cents to €2.61 in Dublin. The shares have traded in heavy volume - 3.2 million shares in Dublin yesterday including a single line of 1.6 million shares - with strong US institutional interest after recent presentations.
