Suzano prepares US$15B bid for International Paper, according to reports

08 May 2024 --- Brazilian pulp and paper giant Suzano has reportedly approached International Paper (IP) with a US$15 billion acquisition offer. However, IP issued a “no comment” statement on the speculations yesterday, noting it is currently coming out of a low-profit cycle and is focusing on its recent merger agreement with DS Smith. Suzano also said in a securities filing that “there is no formal document or celebration of any agreement.”

The reports, issued by sources to Reuters, claim that a potential bid of US$42 a share by the Brazilian behemoth was communicated verbally and suggested a formal proposal could be submitted within days. The outlet cited inside sources. The offer would be a 14% premium to IP’s closing price on Monday.  

Following the rumors, IP’s share price spiked as much as 12% after the news broke, giving the company a market capitalization of roughly US$13.5 billion.

Suzano’s shares dropped 8.3% in Brazil, and DS Smith’s fell as much as 7.3% in London. Suzano has a market value of roughly 77.6 billion reais (US$15.33 billion).

Yesterday evening, IP issued the following statement: “Consistent with its standing practice, IP offers no comment on rumors or speculation contained in recent media reports.”

“The IP team, led by new CEO Andy Silvernail, is executing on business strategies and pursuing commercial and cost improvement initiatives across the portfolio to achieve best-in-class profit margins and significant earnings growth.”

“In addition, as industry conditions continue to improve, IP will come out of a cyclical bottom for earnings. The company is also focused on completing its previously announced combination with DS Smith, which offers a unique and highly compelling opportunity to create significant shareholder value above its base plan.”

Suzano statement
In a statement, Suzano’s chief financial and investor relations officer Marcelo Feriozzi Bacci said: “The company is continuously analyzing market opportunities and investments aligned with its strategy.”

“Nevertheless, the company clarifies that, to date, there is no formal document or celebration of any agreement, binding or otherwise, by Suzano, nor any decision or resolution of its management bodies regarding the potential operation reported by the media.”

“The company also informs that it has conducted the relevant internal investigations and inquired its administrators about the news reported in the media before providing this clarification.”

DS Smith merger complications
The acquisition proposal could complicate IP’s recent agreement to acquire DS Smith for £5.8 billion (US$7.2 billion). The merger is set to deliver at least US$514 million in pre-tax cash synergies.

However, according to the Reuters sources, Suzano’s offer to IP could be conditional on it abandoning the deal with DS Smith.

The rumors also indicated that IP is likely to reject the initial US$15 billion offer.

This breaking news story will be updated as developments emerge.

By Louis Gore-Langton

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