Suzano has ended its pursuit of acquiring International Paper (IP) which opted to pursue merger plans with another competitor, Bloomberg News reported on Wednesday.
The company announced late Wednesday that it could not engage International Paper in serious discussions and was not willing to further increase its offer.
“It has always been a condition of Suzano for the completion of this transaction that the engagement between the parties be based on private, confidential and amicable terms,” Suzano said.
“As it was not possible to proceed in this manner, Suzano has decided to terminate the negotiations.”
The news sent IP shares falling more than 14% in premarket trading Thursday.
However, Jefferies analysts believe the dip represents a buying opportunity, saying the stock “is worth at least in the low $50s following the $40 / cboard increase realization.”
“We could see the stock approach $90 over time,” they added.
Suzano’s decision to drop the IP takeover plans clears the way for International Paper to acquire DS Smith, a deal expected to close in the fourth quarter.
“With DS Smith trading at ~30% implied discount to the takeout price from IP as the market prices in risk the deal breaks, with IP walking from the transaction if Suzano acquires IP, with this latest news, the stock likely rallies tomorrow,” Jefferies analysts concluded.
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