Shares of International Paper (NYSE:IP) fell over 13% in after-hours trading on June 26. This decline came after Suzano (NYSE:SUZ), a Brazilian pulp and paper company, announced that it had ended its efforts to acquire IP.
IP is a pulp and paper company offering sustainable packaging solutions. Its stock is up about 32% year-to-date, reflecting signs of demand recovery.
Suzano Ends Bid for IP
In May, Reuters reported that Suzano intended to acquire International Paper for about $15 billion, offering $42 per share. However, International Paper showed little interest and was likely to reject the offer as inadequate.
Suzano’s bid to acquire International Paper came shortly after the latter announced its acquisition of British packaging firm DS Smith (GB:SMDS).
Nevertheless, Suzano recently stated that it had reached the maximum price at which the acquisition would benefit the company. As a result, Suzano will no longer pursue the acquisition and maintain its capital discipline.
Progress on IP’s Acquisition of DS Smith
International Paper is progressing with its acquisition of DS Smith. The company said the waiting period under the Hart-Scott-Rodino Act, a regulatory requirement, has expired.
This clears the way for the merger. However, the deal still requires regulatory clearance from the European Commission and court approval.
Is IP a Good Stock to Buy?
While investors reacted negatively to the failed Suzano deal, the company continues to benefit from the positive momentum in the demand environment. Moreover, IP’s focus on improving its product mix and margins in packaging businesses is encouraging.
Wall Street is cautiously optimistic about International Paper stock. It has received four Buys and two Holds for a Moderate Buy consensus rating. The analysts’ average IP stock price target is $48.25, implying 3.52% upside potential from current levels.
