Madison Dearborn closes in on Smurfit

The US private equity firm is expected to make a formal offer in the region of E3.2bn for the Dublin-listed paper manufacturer.

Madison Dearborn, the US private equity house, has reached agreement with the board of Irish paper and packaging firm Jefferson Smurfit on the terms of a E3.5bn deal to take the company private.

According to a report in The Times, the offer will be made at E3.20 per share, a small premium to the firm’s closing price of E3.15 on Friday. Other weekend newspaper reports suggest a bid could come in as high as E3.80. Smurfit had traded at around E2.60 until news emerged in early May of a possible bid from Madison.

Smurfit is the world’s largest manufacturer of paper-based packaging with a global market share of twelve per cent. Confirmation of the offer is expected as early as today or tomorrow.

The public-to-private deal would be one of the largest European transactions this year and the largest LBO in Irish corporate history, surpassing the E3.1bn paid by Soros Private Equity Partners for fixed line telecoms company Eircom last year.

The offer has been approved by company chairman Michael Smurfit and other senior executives who between them own more than ten per cent of the company’s equity. Smurfit is expected to remain as company chairman under the firm’s new ownership.

Deutsche Bank is advising Madison Dearborn, with UBS Warburg and IBI Corporate Finance advising Smurfit.