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International Paper bids for Temple-Inland

International Paper bids for Temple-Inland
Monday, June 6, 2011 - 5:40pm

MEMPHIS, Tenn. — Packaging and building materials maker Temple-Inland is rejecting a $3.3 billion unsolicited takeover bid from larger rival International Paper Co., saying the offer is too low and would face heavy regulatory scrutiny.

Memphis-based International Paper proposed a bid of $30.60 per share — or around $3.3 billion — for all outstanding shares of Austin, Texas-based Temple-Inland Inc. That represents a premium of about 45 percent over Temple-Inland's closing stock price of $21.01 on Monday. Temple-Inland's shares have traded as high as $26.21 in the past year.

Temple-Inland said the bid undervalues its business. Temple-Inland said International Paper is acting now because Temple-Inland's building materials business has weakened in the economic downturn. Temple-Inland makes particleboard, gypsum board and other building materials.

Temple-Inland added that the deal would likely be scrutinized by federal anti-trust regulators. Temple-Inland currently controls around 12 percent of the North American market for corrugated packaging materials. A combined company would control around 40 percent of that market, Temple-Inland said.

"As the economic recovery continues and the benefits from our strategy continue to be realized, it is the stockholders of Temple-Inland who should gain from those anticipated benefits, not the stockholders of IP," Temple-Inland Chairman and CEO Doyle Simons said in a statement.

International Paper said it first proposed a merger verbally on May 17. On Saturday, Temple-Inland informed International Paper that its board had unanimously rejected the deal.

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