Shares in Smurfit Kappa Group (LON:SKG), Europe’s largest producer of paper-based packaging, have rallied in London this morning, as the company rejected an unsolicited takeover approach by Memphis-based International Paper Company. The blue-chip group argued that the proposal ‘failed entirely’ to reflect its growth prospects.
As of 08:18 GMT, Smurfit Kappa’s share price had added 18.13 percent to stand at 3,018.00p, lending support to the benchmark FTSE 100 index which currently stands 0.85 percent higher at 7,176.35 points. The group’s shares have added more than 33 percent to their value over the past year, as compared with about 2.3 percent drop in the Footsie.
Smurfit Kappa rejects bid
Dublin-based Smurfit Kappa announced in a statement this morning that it had received an unsolicited cash-and-share proposal from International Paper. The FTSE 100 group said that its board had carefully considered the proposal and believed that it was “in the best interests of the Group’s shareholders and other stakeholders to pursue its future as an independent company”.
“The Proposal fails entirely to reflect the Group’s strong growth prospects and attractive industry outlook,” the company pointed out, without, however, disclosing details surrounding the value of the takeover offer.
The unsolicited offer came after the FTSE 100 company recently announced EBITDA for 2017 of €1.24 billion and a full year return on capital employed (ROCE) of 15 percent, noting that the underlying positive trading conditions had continued into the current year.
Analysts on packaging group
Goldman Sachs Group, which sees Smurfit Kappa as a ‘buy,’ boosted its price target on the shares from 2,700p to 3,000p yesterday. According to MarketBeat, the blue-chip packaging group currently has a consensus ‘buy’ rating and an average price target of 2,845p.