PE_Suzano (2)

Following rumours of a $15 billion acquisition offer for International Paper, Suzano is now expected to place a higher bid – raising questions as to whether International Paper shareholders will support its own acquisition of DS Smith.

Earlier this month, anonymous sources told Reuters that Suzano was proposing a $15 billion acquisition of International Paper worth around $42 per share. The deal was conditional on International Paper walking away from its own acquisition of DS Smith.

International Paper went on to reject this initial approach. Now more anonymous sources claim that Suzano plans to raise its offer by a ‘few dollars’ per share, but they emphasize that it is uncertain whether Suzano’s new bid will succeed.

Reuters believes Suzano’s acquisition could disrupt proceedings as International Paper tries to convince its shareholders to back the DS Smith deal. Apparently, they will vote on this transaction on a date soon to be announced by International Paper.

During market hours on the news on Monday, International Paper’s shares rose by more than 1.3% and further extended gains in trading after the bell. Suzano’s closed up more than 1% in Brazil, Reuters reports.

Walter Schalka, Suzano’s outgoing CEO, previously commented that the company’s management “will not do anything that could put the company at risk”, but did not comment on its talks with International Paper.

Originally, Mondi expressed its interest in acquiring DS Smith back in February. The merger was expected to exceed €11.5 billion in value and create an ‘industry leader’ for paper packaging solutions in Europe – yet disagreements between the companies’ shareholders were feared to lower the agreement below the ideal intrinsic value price target.

International Paper’s counterbid threw a spanner in the works and initiated a bidding war with Mondi. It was anticipated that DS Smith’s shareholders would own around 33.8% of the combined group – as opposed to the 46% they would hold under Mondi – and receive 0.1285 shares in International Paper for every DS Smith’s share.

International Paper would ultimately come out on top with an all-share combination. Under this deal, each DS Smith share is reportedly valued at 415 pence; International Paper shareholders will acquire pro forma ownership of 66.3%, while DS Smith’s will have 33.7% – indicating a transaction value of around $9.9 billion.

If you liked this story, you might also enjoy: 

How are the top brands progressing on packaging sustainability? 

The ultimate guide to global plastic sustainability regulation 

How bad is ‘greenwashing’ in fast fashion packaging? 

A conversation with P&G’s Chief Sustainability Officer