(Bloomberg) — Suzano SA ended its pursuit of an acquisition of International Paper Co., which rejected its overtures in favor of its own merger plans with another rival.
Suzano was never able to draw International Paper into serious engagement and wasn’t willing to increase its offer further, the Brazil-based company said late Wednesday. International Paper, based in Memphis, Tennessee, fell more than 13% in late trading, while Suzano’s US-listed shares soared 12% as of 8:13 p.m. in New York.
“It has always been a condition of Suzano for the completion of this transaction that the engagement between the parties be based on private, confidential and amicable terms,” Suzano said. “As it was not possible to proceed in this manner, Suzano has decided to terminate the negotiations.”
The decision removes a complication to International Paper’s plan to acquire DS Smith Plc. That deal is expected to close in the fourth quarter, the companies said Tuesday.
A takeover would have enabled Suzano, the world’s largest pulp producer, to expand internationally and diversify operations into the more stable packaging sector.
The company had seen room to take on substantial debt as it considered the deal, people with direct knowledge of the matter previously told Bloomberg. Investors had responded negatively to a potential takeover, raising questions about Suzano’s ability to maintain its investment grade if it took on added debt.
Suzano did not provide details on its maximum price offer in its statement. International Paper had rebuffed an initial offer of $42 per share, which would have valued the company at almost $15 billion, and people familiar with the matter had told Bloomberg the company was likely to reject any offer below the mark of $50 per share, or a total $17.3 billion.
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