‘50:50 chance’ of higher Smurfit offer

By Eamon Quinn

Shareholders should stick with Smurfit Kappa because there is still a 50:50 chance US rival International Paper would again raise its bid closer to €40 a share after Smurfit posted a strong start to the year, said Darren McKinley, a senior equity analyst at Merrion.

The advice comes after chairman Liam O’Mahony and chief executive Tony Smurfit gave little away at an annual shareholders’ meeting over the poker game involving the International Paper bid that values Smurfit at €8.9bn.

Tony Smurfit.

With the board ruling out questions on the offer, only one question on an unrelated matter was asked by a shareholder at yesterday’s meeting.

Mr O’Mahony hailed the “strong performance” in earnings in a trading update, the first since Smurfit rejected an increased offer by International Paper in late March.

Mr Smurfit told reporters it was very much business as usual, saying there had been a low turnover in Smurfit shares since the US company unveiled its offer. The company had committed to investments this year, part of decisions approved in 2017, he said.

“Trading in the second quarter remains very encouraging with good demand across most regions, continued corrugated price recovery. We are excited about our prospects in the short, medium and long-term and expect 2018 earnings before interest, tax, depreciation, and amortisation to be materially better than 2017,” Mr Smurfit told shareholders.

Those earnings climbed to €340m in the three months to the end of March, up 22% from a year earlier. Net debt stood at almost €2.8bn. Smurfit shares rose 0.75% to €34.62, which values the firm at €8.27bn.

Smurfit employs 46,000 staff in 35 countries, and has 36 mills and owns extensive forests to produce the raw material for its packaging products.

At €17.82bn, New York-listed International Paper is by far the larger company. Its shares were up by 1.25% yesterday.


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