Smurfit Kappa agrees Dutch paper deal, investors urge US bid talks

Smurfit Kappa agreed to acquire privately owned paper and recycling business Reparenco for approximately €460m following a competitive process, while facing mounting shareholder demands to revive talks with US suitor International Paper.

Reparenco, which operates a two machine paper mill in the Netherlands, was seen as a "strong strategic fit" with SKG's existing European businesses and is expected to deliver "significant synergies" in the near-term across a number of areas, including increased integration of containerboard and recycling operations into the group. The acquisition will be funded from existing resources.

Reparenco employs 315 people, holds gross assets of €189m and generated an EBITDA of €41m in its most recent trading year, during which time the business continued to ramp up production. The Dutch business has projected full-year EBITDA to be in the region of €72m.

In March, Ireland-based, FTSE 100-listed Smurfit itself rejected takeover offers from US-based International Paper with a second offer of €37.54, up from €36.46, valuing the group at close to €9bn. Smurfit said at the time that the revised proposal "fundamentally" undervalued the group and was still significantly below the valuations set by recent industry transactions, with the Memphis-based group given until 6 June to come up with a final offer by the Irish Takeover Panel.

Overnight, three major shareholders stepped up calls for management to end its refusal to engage with the US suitor Paper and enter into negotiations with the US group. The Financial Times reported the investors included Janus Henderson, Smurfit’s third-biggest shareholder with a 4.3% stake.

Ignoring this to focus on the Dutch deal, chief executive Tony Smurfit said, "The acquisition of Reparenco is complementary with our existing business; strengthens our integrated business model and accelerates a central element of our medium-term plan.

"We believe there is a strong cultural fit between our businesses and that, together, we will generate value in the short, medium and long term for all our stakeholders."

After less than an hour of trading on Thursday, SKG shares had collected 0.73% to 3,046p.