U.S. packaging company International Paper will not make a hostile bid for Irish rival Smurfit Kappa, it said on Wednesday after being given until June 6 to make a binding offer.
Smurfit Kappa frustrated a bid to combine the largest listed U.S. paper packaging company with Europe's biggest when it rejected a sweetened takeover offer in March, arguing that it was better served to pursue its future as an independent company.
The Irish Takeover Panel said on Wednesday that, following representations made by Smurfit and its advisers, International Paper had three weeks to announce whether or not it will follow up with a binding offer.
A Compelling Proposal
"International Paper believes its current proposal represents a compelling strategic and financial rationale for a combination with Smurfit Kappa," the Memphis-based company said in a statement.
"From the outset, IP has stressed the importance of proceeding on an agreed basis. To that end, IP confirms that it will not proceed with a binding offer unless it is recommended by Smurfit Kappa's board of directors."
IP, which in March made a cash and shares offer that valued the Irish group at €8.9 billion, tweaked its terms to offer Smurfit shareholders a "mix and match" facility that could allow them to receive a greater or lesser proportion of cash or shares.
It added that it would also seek a secondary listing on the London Stock Exchange to enable Smurfit Kappa shareholders to share in the potential value created by a transaction.
IP suggested that the two companies should meet to discuss the potential for the combined company.
Smurfit has said that IP's latest proposal failed to value its intrinsic business worth and said it was very comfortable with the position it had outlined to its shareholders.
A spokesman for Smurfit said it had no immediate comment on Wednesday's statement.