International Paper Co. commenced a fully financed tender offer to acquire all outstanding Temple-Inland shares as part of a $3.3 billion takeover attempt of the corrugated packaging and building material manufacturer. International Paper announced on Monday that the tender offer is $30.60 per share in cash, which is 46% above what Temple-Inland's stock closed at on June 6, when an offer was first made to purchase the company. The tender offer begins today and will last until August 9.
International Paper's "friendly" offer, in June, to purchase Temple-Inland was turned down by the company's board. After a month of negotiating, International Paper decided to go straight to share holders.
In an SEC filing on Monday, International Paper said that one of the potential values the tender offer could provide Temple-Inland's shareholders is the "realization of the benefits from a potential cyclical improvement in Temple-Inland's building products segment, even with a recovery uncertain and likely years away." If successful, the acquisition could greatly improve International Paper's marketshare in the corrugated packaging industry.
"We believe Temple-Inland's price expectations are unrealistic and their unwillingness to engage in any meaningful discussions with respect to value has left us with no alternative but to make our offer directly to Temple-Inland shareholders," said John Faraci, chairman and CEO of International Paper.
Temple-Inland announced its Board of Directors will review the offer "to determine the course of action that it believes is in the best interest of the company and its stockholders." The company has told investors not take any action until a review has been completed. The company said it intends to notify investors of its position regarding the offer within ten business days.
"We respect Temple-Inland, but we disagree on the realistic standalone value of the company, which we believe is currently $21 to $24 per share," said Faraci. "The premium we are offering is substantial, the multiple is well above recent directly comparable transactions, and we are providing Temple-Inland shareholders the certainty of cash in the midst of a very uncertain economic environment."