Temple-Inland, one of the industry’s largest producers of wood and paper products, announced June 6 that it has received an unsolicited offer from International Paper Co. (IP), another pulp and paper giant, to acquire the company for $30.60 per Temple-Inland share in cash.
Temple-Inland's board of directors voted unanimously to reject the offer “after careful consideration with its independent financial and legal advisers,” according to a public statement. IP’s proposal “grossly undervalues Temple-Inland and is not in the best interest of Temple-Inland's stockholders,” the board said.
In a letter to IP’s chairman and CEO, John Faraci, the chief executive of Temple-Inland made his intentions clear.
"Since we launched the 'new' Temple-Inland in January 2008, we have delivered superior results to our stockholders compared with our corrugated packaging peers (including IP), building products peers and the S&P 500,” wrote Doyle Simons, Temple’s chairman and CEO. “Since that time, our total return to stockholders of 22% greatly exceeds the 5% total return that IP has achieved. Through our proven ability to execute our strategy focused on maximizing return on investment (ROI) and profitably growing our business, the board believes the company will continue to provide superior results for our stockholders."
Simons also stated that, "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."
Among the many reasons listed in the letter were expected opposition from governmental antitrust authorities, “extremely opportunistic timing” of the offer and an overstatement of Temple-Inland’s net debt.