Smurfit Kappa Group PLC (LON:SKG) shares shed almost 6% on Wednesday after US packaging firm International Paper Co. (NYSE:IP) said it will not make a hostile bid for its FTSE 100-listed Irish rival after being given until June 6 to make a binding offer.
The Irish Takeover Panel had said earlier that, following representations made by Smurfit and its advisers, International Paper had three weeks to announce whether or not it will follow up with a binding offer.
In a response statement, International Power said: "From the outset, IP has stressed the importance of proceeding on an agreed basis. To that end, IP confirms that it will not proceed with a binding offer unless it is recommended by Smurfit Kappa's board of directors.”
The Memphis-based group added that it believes “its current proposal represents a compelling strategic and financial rationale for a combination with Smurfit Kappa."
In March, International Paper made a cash and shares bid approach that valued the Irish group at €8.9bn (US$10.5bn), and subsequently tweaked its terms to offer Smurfit shareholders a "mix and match" facility that could allow them to receive a greater or lesser proportion of cash or shares.
Smurfit Kappa rejected that sweetened takeover offer in March, arguing that it was better served pursuing its future as an independent company.
The group said that International Paper's proposal - which would combine the largest listed US paper packaging company with Europe's biggest - failed to value its intrinsic business worth.
In afternoon trading, Smurfit Kappa shares in London were down 5.8% at 2,928p. In early New York, International Paper shares were up 2.8% at US$55.29.