Pulp & Paper Strategic & Financial Arguments for March 2018

Strategic & Financial Arguments(TM)

for the pulp and paper industry worldwide

March 2018

Participating as industry experts in pulp and paper financing and M & A deals around the world for over two decades, we continue to see the same mistakes made over and over. This newsletter is designed to help you avoid costly mistakes we have seen others make. We will be giving you one or two points each month to help improve your performance.

What is the International Paper plan?

By Jim Thompson

Disclosure--I have a long term consulting arrangement with Smurfit Kappa at the local mill level in the United States, but I have no contacts with Smurfit Kappa corporate.

This past week, International Paper made a run at Smurfit Kappa, headquartered in Dublin, Ireland. Likely the rebuff of this first offer will not be the end of this adventure. When one looks at where these two companies' geographical strengths in packaging lie, it may make sense to put them together.

Smurfit Kappa is the largest box maker in Europe, but they have only 16% of the market. They are also a significant player in South America. Yet the markets Smurfit Kappa plays in are fragmented and many of them have assets closely held by private companies unwilling to sell. This makes a tough row to hoe for IP down the road.

Nevertheless, IP is usually not known for taking the short view; a public corporation can outlast the most vigorous private family ownership in many cases. That just may be the plan--stick one's toe in the water and wait for mortality to run its course.

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If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.

Sincerely,

Jim Thompson, CEO
Talo Analytic International, Inc.

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