International Paper (IP), Memphis, Tenn., has made an unsolicited offer to acquire all the outstanding shares of Austin, Texas-based Temple-Inland for a 44 percent premium to Temple-Inland’s stock price on June 6.
IP first extended its takeover offer to Temple-Inland May 17, 2011, which received a unanimous rejection from Temple-Inland’s board. Subsequently, IP says it has made a number of attempts to further discuss the proposed acquisition.
"We are very disappointed with the response of Temple-Inland's board of directors,” says John Faraci, IPchairman and CEO. “We believe that our proposal offers clearly superior and compelling value to Temple-Inland's shareholders. Our proposal reflects the future business plans and economic outlook for Temple-Inland and for the sector and incorporates a significant portion of the cost savings resulting from the merger of International Paper and Temple-Inland while at the same time creating value for International Paper shareholders."
Regarding the offer, Doyle Simons, Temple-Inland CEO, says, "Since we launched the 'new' Temple-Inland in January 2008, we have delivered superior results to our stockholders compared with our corrugated packaging peers (including IP), building products peers and the S&P 500. Since that time, our total return to stockholders of 22 percent greatly exceeds the 5 percent total return that IP has achieved. Through our proven ability to execute our strategy focused on maximizing return on investment (ROI) and profitably growing our business, the board believes the company will continue to provide superior results for our stockholders.
Simons continues, “As the economic recovery continues and the benefits from our strategy continue to be realized, it is the stockholders of Temple-Inland who should gain from those anticipated benefits, not the stockholders of IP."
Simons also says the acquisition would likely face prolonged and rigorous investigation by antitrust authorities, which would have an uncertain outcome. He adds that the combined company would control an almost 40 percent share of North American containerboard capacity.
“Given the expected scrutiny by U.S. antitrust authorities, it is likely that a potential transaction would require a significant amount of time to complete, even under the most favorable circumstances,” Simons adds.