International Paper Seeks to Reassure DS as Suzano Plots Bid

Source: Suzano Is Working on Revised Offer for International Paper After Company Rejected Earlier Informal Offer
International Paper plant
An International Paper Co. plant. (Paul Taggart/Bloomberg News)

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International Paper Co.’s top boss traveled to London to reaffirm his company’s commitment to merger partner DS Smith Plc, downplaying a takeover offer from Suzano SA that threatens to derail their pending $7.4 billion deal, according to people with knowledge of the matter.

International Paper ranks No. 3 on the Transport Topics top paper/office products carriers sector list.

Andrew Silvernail, who took over as CEO of the Memphis, Tenn.-based packaging giant just last month, met recently with Miles Roberts, his counterpart at London-based DS Smith, as well as key shareholders of the company, the people said, asking not to be identified because the discussions are private.

International Paper agreed in April to buy DS Smith in an all-stock transaction, but a takeover by Suzano would almost certainly thwart that deal.

Meanwhile, Suzano, the world’s largest pulp producer, is working on a revised offer for International Paper, the people said, after the U.S. company rejected an earlier informal proposal valuing the company at almost $15 billion.


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David Feffer, the chairman and a member of the family that controls Sao Paulo-based Suzano, is enthusiastic about a deal with International Paper and has been personally involved in crafting the proposal, they said.

International Paper, Suzano and DS declined to comment.

Thus far, Silvernail and International Paper have rebuffed Suzano’s overtures, characterizing the initial $42-a-share offer as too low. There are questions over how much the Brazilian company can raise its proposal without hurting its credit rating.

Still, the more that Suzano proposes to pay, the greater the pressure from International Paper’s investors on management to engage with the Feffers’ company, the people said.

International Paper has soared more than 20% since May 6, the day Suzano’s approach for the company was first reported.

A takeover by Suzano would create a pulp and paper powerhouse handling every step from eucalyptus tree planting to corrugated box distribution, with operations spanning North America to Japan. The Brazilian business already controls almost a third of global capacity for hardwood pulp, a key raw material for tissue and writing paper.

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