Madison Dearborn set to buy Jefferson Smurfit?

The US private equity firm is said to be offering £2bn for the Irish paper and packaging business.

Madison Dearborn, the Chicago-based private equity firm which has been growing a portfolio of paper and packaging businesses, is rumoured to be the lead backer to a circa. £2bn bid for listed Jefferson Smurfit Group PLC.

In a deal that is reported to be supported by key members of the Smurfit family, who occupy the top positions at Jefferson Smurfit, Madison Dearborn and other co-investors would buy the entire business, using the company's 29 per cent stake in US affiliate Smurfit Stone Container Corporation [SSCC] as a sweetner for shareholders.

It is reported that the shares in SSCC would be given to Jefferson Smurfit shareholders as a special dividend. This would have the effect of reducing the company's value by circa. £500m to £1.5bn.

The Smurfit family, already one of Ireland's wealthiest, could net around £200m from the transaction: they hold 10 per cent of the company's shares, with Chairman and CEO Michael Smurfit owning most of this stake.

Jefferson Smurfit announced last week that it was in talks with a third party that could lead to an offer for parts or the whole of the company. It would not disclose who the third party was but press reports over the weekend put Madison Dearborn, which already owns five paper and packaging businesses, in the frame.