Suzano Paper Ends Pursuit of International Paper Acquisition Amid DS Smith Merger Progress

Suzano Papel e Celulose, a Brazilian pulp manufacturer, has abandoned plans for a bid to acquire International Paper, a U.S.-based paper maker, after International Paper agreed to a merger with DS Smith PLC, a UK-based paper company. The merger was approved by regulators, allowing the deal to proceed in the fourth quarter of 2024. International Paper, the world's largest pulp and paper manufacturer, hopes to expand its international presence and implement cost-saving measures through the merger with DS Smith.

In a surprising turn of events, Brazilian pulp and paper giant Suzano Papel e Celulose (SUZB3.SA) has reportedly abandoned its plans to acquire U.S.-based International Paper (IP.N) following the approval of International Paper's merger with DS Smith PLC (SMDS.L) by regulators [1]. The deal, valued at approximately $15 billion [1], was expected to be disrupted if Suzano were to press ahead with its bid for Memphis-based International Paper [1].

Suzano's overture to International Paper came less than a month after International Paper announced its agreement to buy DS Smith for $7.2 billion [1]. This acquisition was expected to extend International Paper's reach in Europe and deliver annual pre-tax cash synergies of at least $514 million [1]. Combining with International Paper would have allowed Suzano to expand its international presence and implement cost-saving measures [1].

According to sources familiar with the matter, Suzano had approached International Paper with an all-cash offer of $42 per share [1]. However, International Paper is expected to reject Suzano's offer as inadequate [1]. Suzano has been in talks to line up debt financing to support its bid [1].

The packaging industry has been active in deal-making as it seeks to maintain growth after a surge in demand during the COVID-19 pandemic [1]. Last year, Ireland-based Smurfit Kappa (SKG.I) agreed to combine with U.S.-based WestRock (WRK.N) in a deal worth $20 billion [1].

The abandonment of Suzano's plans for an acquisition of International Paper marks the end of a significant potential transaction in the global pulp and paper industry.

[1] Reuters. (2024, May 7). Brazil's Suzano readies $15 billion bid for International Paper - sources. https://www.reuters.com/markets/deals/brazils-suzano-readies-15-bln-bid-international-paper-sources-say-2024-05-07/