International Paper[Paper?:paper sample maker cutting machine] Co. said Monday it has launched an unsolicited tender offer for smaller rival Temple-Inland Inc. for about $3.3 billion.
The offer, at $30.60 per share in cash, It is a 46 percent premium to Temple-Inland's closing price on June 6, the day Temple-Inland rejected International Paper's initial offer at the same price.
Temple-Inland, based in Austin, Texas, says the offer undervalues its business. It says International Paper is acting now because Temple-Inland's building materials business has weakened in the economic downturn. The company makes particleboard, gypsum board and other building materials.
Temple-Inland also has said 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[packaging?:DCP-H series packaging sample cutter plotter] materials. A combined company would control around 40 percent of that market, Temple-Inland said.
International Paper said it first proposed a merger verbally on May 17.
After informing International Paper in June that its board had unanimously rejected the proposed deal, Temple-Inland announced the next day that it had adopted a "poison pill" designed to prevent a hostile takeover. A poison pill makes an acquisition more expensive by increasing the number of the target company's shares
International Paper said its offer is conditioned on Temple-Inland's board removing the poison pill.
