Smurfit Kappa share price rises as International Paper scraps bid

London-listed group reiterates 2018 EBITDA outlook

Smurfit Kappa share price rises as International Paper scraps bid

Shares in Smurfit Kappa Group (LON:SKG) have advanced in London this morning with investors welcoming news that Memphis-based International Paper Company has decided to end its pursuit of the FTSE 100 producer of paper-based packaging. The move came after the US group made two takeover proposals earlier this year.

As of 09:47 BST, Smurfit Kappa’s share price had added 3.12 percent to 3,010.97p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.31 percent higher at 7,710.60 points. The group’s shares have added more than 36 percent to their value over the past year, as compared with about a 2.4-percent gain in the Footsie.

International Paper scraps bid

International Paper announced in a statement yesterday that it will not make an offer for Smurfit Kappa, ‘given the lack of engagement’ by the London-listed group’s management. The move came after the US company put forward a proposal in February, followed by a revised bid in March.

Smurfit Kappa, which rejected both proposals, meanwhile said in a statement this morning that it believed it had “superior prospects as a standalone business”.

“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 will be materially better than 2017,” the group’s chief executive Tony Smurfit commented in the statement.

Analysts on Smurfit Kappa

The nine analysts offering 12-month price targets for Smurfit Kappa for the Financial Times have a median target of 37.50p on the shares, with a high estimate of 39.50p and a low estimate of 33.00p. As of June 1, the consensus forecast amongst 10 polled investment analysts covering the blue-chip group has it that the company will outperform the market. 

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