Suzano’s bid for International Paper: Brazilian pulp giant considering increased offer, say reports

28 May 2024 --- Latin America’s largest pulp and paper producer, Suzano, is rumored to be weighing up a bigger offer for International Paper, for which the Brazilian giant was reportedly preparing a US$15 billion acquisition bid earlier this month. Suzano has now confirmed its interest in a merger, despite initially denying the rumors.

Unconfirmed reports that Suzano is working with advisors to increase a bid for International Paper were announced last week. Initial reports also suggested that IP would reject a US$15 billion offer as insufficient.  

New reports allege the company is raising money from banks, including Mizuho Financial Group, Nomura Holdings and Mitsubishi UFJ Financial Group to finance a higher offer. The funding arrangement with banks would mimic the one for Suzano’s US$11 billion acquisition of pulp rival Fibria in 2018, a deal that included a bridge loan and a pre-export finance facility and counted Mizuho among leading lenders.

Since Reuters broke the news on May 7 that Suzano had approached IP with an offer, which was reported by confidential sources, Suzano investors appear to have had a negative reaction to a possible deal. 

The company’s stock dropped more than 17% since May 6. Shares of the Brazilian company were down as much as 1.5% in early trading in São Paulo last week. International Paper’s shares fell as much as 2.1% in New York, though they are still up 27% since May 6. 

International Paper is currently in the process of acquiring DS Smith for £5.8 billion (US$7.2 billion) after a bidding war with Mondi. Any potential deal with Suzano would complicate the DS Smith deal and could potentially end the merger altogether. 

By Louis Gore-Langton