International Paper confirmed this morning it has abandoned an approach for FTSE 100 business Smurfit Kappa after a "lack of engagement" from the corrugated packaging company's management.
Mark Sutton, chairman and chief executive of International Paper, said:
While we continue to believe in the strategic and financial potential of this combination, our commitment was to proceed in a disciplined manner that would create value for both sets of shareholders.
Moving forward, we remain focused on executing our strategy and are excited about our outlook. We have many levers to create shareholder value and will be responsible stewards of our shareholders' capital.
Smurfit Kappa shrugged off a €8.9bn (£7.8bn) takeover bid in March from the US packaging business, and was braced to fend off one last takeover attempt as the deadline for its suitor to make a final bid approached.
Memphis-based IP, whose advances had been rejected by Smurfit’s boss as “fundamentally undervaluing” the business, had until today to either lay a final bid on the table or be banned from approaching the company for another year.
IP said that in February it provided Smurfit Kappa with details of its proposal to acquire the company, and following discussions with shareholders at both companies it then put forward a revised proposal in March.
IP said the revised proposal was "highly attractive and formed a sound basis for engagement", which it said was "essential to determining the full value of the potential combination".
But Smurfit Kappa rejected the approach, saying it didn't make "strategic sense", and still did not reflect the company's "intrinsic value, track record, and superior prospects as an independent business".
Last month, Smurfit tied up its own €460m deal to acquire Reparenco, a paper business in the Netherlands.
Today, the Smurfit Kappa board said they believed the company had "superior prospects" as a standalone business.
Chief executive Tony Smurfit, said:
The acquisition of Reparenco will have a positive impact on our integrated model and we are targeting delivery in excess of €30m of synergy benefits.
Strong business conditions and a positive operating environment together with significant and early progress against our medium term plan reaffirms our confidence that 2018 EBITDA [earnings before interest, tax, depreciation and amortisation] will be materially better than 2017.