Smurfit Kappa still not interested in IPs offer

At the AGM, Liam O’Mahony, Chairman of Smurfit Kappa, read the following statement:

Let me provide you with some background and context to the International Paper proposals.

We received an unsolicited approach from International Paper in mid-February this year seeking a meeting to discuss a proposal regarding the acquisition of Smurfit Kappa by International Paper. I met with the Chairman & CEO of International Paper and his SVP of Corporate Development in London, together with our CEO, at which meeting we received a letter setting out IP’s initial proposal to acquire Smurfit Kappa.

The Board, as a whole, together with our advisors, carefully evaluated the proposal in line with the Board’s responsibilities to stakeholders – in particular, the Group’s shareholders. Having received independent financial advice in accordance with our obligations under the Takeover Rules, the Board unanimously concluded that the initial proposal failed to value the Group’s true intrinsic business worth and prospects. We communicated our rejection of that proposal to International Paper on 5 March and to the market on 6 March.

On 22 March, IP’s Chairman approached us again and indicated to me on the phone their intention to make a revised proposal which I then received in writing. Again, following due and careful consideration by the Board and its advisors, the Board unanimously determined that the best interests of the Group’s stakeholders are served by pursuing its future as an independent company. Accordingly, we announced to the market on 26 March that the Board unanimously rejected International Paper’s revised proposal.

Throughout this process, the Board has been fully aware of its fiduciary obligations and has given careful consideration to each proposal from International Paper. We have dealt with International Paper in a professional manner and have actively and thoroughly evaluated each of the proposals received. We announced our position to the market as a whole on 6, 7 and 26 March respectively and have also engaged with shareholders to outline our position with respect to International Paper’s proposals.

In conclusion, the Board of Smurfit Kappa has, together with its financial advisors, given due and careful consideration to the International Paper proposals and has unanimously rejected them on the basis that they entirely fail to value the Group’s true intrinsic business worth and prospects.

First Quarter 2018

Turning now to the first quarter. As you may know, consistent with our focus on the Group’s longerterm strategic direction, and with the practice of the majority of our FTSE 100 peers, we have moved from quarterly reporting to semi-annual reporting together with quarterly trading updates. This morning we issued our first trading update under this new reporting cycle for the first three months of 2018.

Our trading update outlines a strong performance in the first quarter with 22% growth in EBITDA to €340 million and significant year-on-year improvement against all key metrics.

First quarter EBITDA of €340 million translates to a first quarter EBITDA margin of 15.7%, an increase of 2.7 percentage points on a margin of 13% in the first quarter of 2017. The Group’s first quarter ROCE was 16.1% equalling the Group’s previous record.

Trading in the second quarter remains very encouraging. We also continue to implement our medium term plan which will enhance our operating platform for sustained growth. We are excited about our prospects in the short, medium and long-term and expect our 2018 EBITDA to be materially better than 2017.”