Smurfit family the losers as Powerflute takeover talks collapse

Shares in Irish-founded packaging company Powerflute fell over 2% yesterday after the Dermot Smurfit senior-chaired firm terminated discussions that could have led to the sale of the company.

Earlier this month, US private equity house, Madison Dearborn Partners approached the Finnish-based company, which has its shares listed in London, with an indicative takeover approach.

In response to that, Powerflute said it was considering the approach.

Michael Smurfit is also a significant shareholder. On the same day, the company’s share price rose nearly 2%.

Yesterday, the stock fell 2.2%, to £89.25 (€12.60), on the back of a short statement saying management had turned down the approach and terminated talks.

“Following evaluation of the proposal, by the independent members of the board of directors of Powerflute and consultations with certain major shareholders of Powerflute, the board has terminated discussions with Madison Dearborn,” the company said.

The US company’s proposed offer had been 90p in cash for the shares not held by Dermot Smurfit or Bacchantes, — the investment firm controlled by his brother Michael.

Between them, the two own just over 37% of Powerflute.

In addition, Madison Dearborn was offering 76p (with a possible 6p earn-out) for the shares owned by Mr Smurfit and Bacchantes.

Even at that stage, however, analysts had suggested that any offer would have to be upwardly revised.

Powerflute has been the best performing European packaging stock, this year, with its shares up by over 90% since January.

In a trading update, earlier this month, it gave a positive outlook for 2016 and said earnings should amount to €53m to €55m.

“Despite the termination of the discussions with Madison Dearborn Partners, we still believe that shares in Powerflute are worth over 100p per share, 12% ahead of Friday’s close,” Barry Dixon of Davy Stockbrokers said yesterday.