A growing number of private equity firms have expressed an interest in joining with US private equity firm Madison Dearborn for the E3.7bn deal to acquire Irish packaging company Jefferson Smurfit.
Following the announcement of the board’s approval of the deal on Monday, there were suggestions that a number of other interested parties, most notably US private equity house Texas Pacific, were considering rival offers for the company.
It now seems more likely that a number of private equity firms may unite to acquire the firm, thereby avoiding an over-concentration of funds in one investment.
The E3.26 per share offer represents a 38 per cent premium to the firm’s share price prior to the commencement of negotiations between the two firms in May.
The Financial Times reports that Chicago-based Madison Dearborn will spend up to E750m of its E5.4bn fund on the acquisition, which is still subject to shareholder approval. The remainder of the financing will be realised through debt. Management at Smurfit, including chairman Michael Smurfit, are being offered the chance to buy up to E75m of the equity.
Smurfit confirmed Monday that it had received one other approach, although the identity of the bidder was not revealed. Yesterday, the Irish Independent newspaper reported that Texas Pacific, headed by Irish budget airline Ryanair chairman David Bonderman, had 'made an approach which could lead to a competitive bid.”
Kohlberg Kravis Roberts had also been suggested as a possible bidder for the firm. However the large premium proposed by Madison Dearborn, coupled with the firm's past experience in paper and packaging companies, would seem to make a rival bid succeeding unlikely.