Bulletin: Strategic Benefits Of International Paper Co.'s Proposed Acquisition Of Smurfit Kappa Overshadowed By Short-Term Risks

NEW YORK (S&P Global Ratings) March 12, 2018--Smurfit Kappa Group PLC announced on March 6, 2018, that it had rejected an unsolicited proposal by International Paper Co. (IP) to acquire the company. In response, IP released details of its proposal, which included consideration of €22 in cash and 0.3028 of new IP shares of common stock for each Smurfit Kappa ordinary share, valuing the company at approximately €8.6 billion. We see potential strategic benefits from the transaction for IP, including a market-leading presence in Europe, a meaningful footprint in Latin America, and potential synergies from the business combination. Still, the likelihood of increased leverage if a significant portion of the cash offer is funded with debt, as well as the

...NEW YORK (S&P Global Ratings) March 12, 2018--Smurfit Kappa Group PLC announced on March 6, 2018, that it had rejected an unsolicited proposal by International Paper Co. (IP) to acquire the company. In response, IP released details of its proposal, which included consideration of 22 in cash and 0.3028 of new IP shares of common stock for each Smurfit Kappa ordinary share, valuing the company at approximately 8.6 billion. We see potential strategic benefits from the transaction for IP, including a market-leading presence in Europe, a meaningful footprint in Latin America, and potential synergies from the business combination. Still, the likelihood of increased leverage if a significant portion of the cash offer is funded with debt, as well as the assumption of Smurfit Kappa's debt and pension liabilities, could have negative rating implications. Under our downgrade scenario, we could lower our ratings on IP if debt-financed acquisitions result in adjusted leverage above 3.5x and it is sustained...

Bulletin