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Brazil's Suzano readies $15 billion bid for International Paper, sources say

NEW YORK (From news reports) - Brazilian pulp and paper company Suzano has approached U.S.-based International Paper to express interest in an all-cash acquisition that would be worth almost $15 billion, according to people familiar with the matter.

The approach comes less than a month after International Paper agreed to buy British packaging firm DS Smith for $7.2 billion, beating out a rival bid from London-listed Mondi. This deal, which is scheduled to close by the fourth quarter of 2024, could be disrupted were Suzano to press ahead with its bid for Memphis-based International Paper.

Suzano has communicated its $42-per-share offer to International Paper's board of directors verbally, and could submit a formal bid in the coming days, according to the sources, who spoke on condition of anonymity.

International Paper shares jumped as much as 12% on the news before paring some gains in early trading in New York on Tuesday, giving the company a market capitalization of about $13.5 billion.

Shares of Suzano, which has a market value of 77.6 billion reais ($15.33 billion), were down 8.3% in Brazil, while DS Smith's shares in London fell as much as 7.3% before reversing those losses to trade up 1.2%.
International Paper is poised to reject Suzano's offer as inadequate, one of the sources said.

Suzano, the world's largest pulp manufacturer, is in talks to line up debt financing to support its bid, and has informed International Paper that the offer would be conditional on the latter abandoning its deal with DS Smith, the sources said.

Suzano declined to comment. International Paper did not immediately respond to requests for comment.

The packaging industry had benefited from a surge in demand during the COVID-19 pandemic as consumers placed more orders through e-commerce sites during worldwide lockdowns. But as e-commerce growth returned to more normal levels after lockdowns were lifted, the sector turned to dealmaking to maintain growth.

Last year, Ireland-based Smurfit Kappa agreed to combine with U.S.-based WestRock in a deal worth $20 billion.

International Paper said last month its tie-up with DS Smith would extend its reach in Europe and deliver annual pre-tax cash synergies of at least $514 million. Combining with International Paper would allow Suzano to expand in packaging.

Suzano is in the middle of a CEO transition. It has tapped Joao Alberto Fernandez de Abreu, the former head of rail operator Rumo, as its new CEO to replace Walter Schalka, who led the company for 11 years.

In February, Suzano reported a 39% fall in its fourth-quarter net profit from a year earlier as lower pulp prices hurt revenue.

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