International Paper has been approached by Brazilian pulp and paper company Suzano about a sale, Reuters reported Tuesday. The company reportedly expressed interest in purchasing IP in an all-cash offer worth nearly $15 billion.
The report comes weeks after International Paper announced an agreement to buy DS Smith on April 16.
Thus far, Suzano — the world’s largest pulp producer, which Reuters values at $15.2 billion — verbally made the proposal to IP’s board of directors, Reuters reported, but could present a formal offer in the coming days. The offer would be contingent upon IP ditching its deal with DS Smith, Reuters reports. But an anonymous source also told Reuters that International Paper would reject Suzano’s offer because it’s “inadequate.”
Suzano declined to comment on the Reuters report. International Paper did not respond to a request for comment by publication time Tuesday morning. In a public statement it released Tuesday afternoon, International Paper said it would offer “no comment on rumors or speculation contained in recent media reports.” It also said the company is focused on completing the transaction with DS Smith.
“Overall, we are unsure of the strategic rationale around acquiring IP,” considering Suzano’s core businesses are bleached hardwood kraft pulp and writing and printing paper, said Michael Roxland, senior paper and packaging analyst at Truist Securities, in a Tuesday morning note to investors. He added that Suzano has a small paperboard business and no containerboard operations.
However, Suzano produces 1% to 2% of the total global fluff pulp supply and plans to increase production next year upon converting a bleached hardwood kraft pulp mill. “Therefore, we think it could be possible for IP to explore selling its fluff pulp business” to Suzano, Roxland said.
Selling off its fluff segments would allow IP to “dispose of a highly cyclical business in which it has faced headwinds thereby allowing it to focus on its core US containerboard operations (and potentially European containerboard ops should its purchase of DS Smith be approved),” Roxland said. Last October, International Paper announced three closures or production halts that would affect 900 jobs, including a machine at a fluff mill in Pensacola, Florida, and another at a fluff mill in Riegelwood, North Carolina.
Barring any disruptions, International Paper’s acquisition of DS Smith is expected to close in the fourth quarter. Mondi had informally agreed to buy DS Smith prior to International Paper entering the scenario, but it withdrew on April 19 following IP’s formal offer submission.
Editor’s note: This story has been updated to include information from a statement International Paper issued Tuesday afternoon.
