HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11736
Location: Los Angeles, California
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 Posted: Tue Jun 07, 2011 5:44 pm Post subject: International Paper (IP) |
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Morningstar on IP's hostile offer of Temple-Inland:
| Quote: | | On Monday, International Paper IP made a hostile offer to acquire Temple-Inland TIN for $30.60 per share. The valuation is roughly 8 times enterprise value to our estimated 2011 EBITDA, which is roughly in line with Silgan's SLGN recent acquisition of Graham Packaging GRM. Should IP be successful in acquiring Temple-Inland, we think it will be able to reap significant cost synergies. However, we believe Temple-Inland may put up a fight and regulators will probably take a close look, which leads to uncertain timing around the proposed transaction. Subsequent to IP's press release notifying investors of the bid, Temple-Inland rejected the unsolicited takeover proposal via a press release of its own. While we believe a merger of North America's largest and third-largest corrugated packaging companies is a strategically sound move that should generate significant synergies, IP may be forced raise its bid and may run into antitrust issues, since the combined firm will control almost 40% of North America's containerboard supply. On May 17, International Paper verbally contacted Temple-Inland's chairman regarding a potential acquisition. Thereafter, the firms communicated via a phone call, an in-person meeting, and a few letters. Temple-Inlan d, which used Goldman Sachs GS as a financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel, formally rejected the $30.60 offer on Saturday via a letter to International Paper. Temple-Inland says the IP offer grossly undervalues the company and its prospects. It believes that the timing is quite opportunistic and that its earnings will improve in the coming years as a result of Box Plant Transformation II and an eventual rebound in the housing sector, which would benefit the firm's building materials segment. |
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