Bloomberg News

Temple-Inland Adopts Poison Pill Defense After Hostile Bid

June 07, 2011

(Updates with closing share price in fourth paragraph.)

June 7 (Bloomberg) -- Temple-Inland Inc. adopted a poison- pill takeover defense after it rejected a hostile $3.31 billion bid from International Paper Co., the world’s largest pulp-and- paper maker.

Temple-Inland said its shareholders will get the right to buy discounted stock should a person or group buy a stake of 10 percent or more, the Austin, Texas-based company said today in a statement.

The plan is “designed to ensure that all of Temple- Inland’s stockholders receive fair and equal treatment in the event of any proposed takeover of the company,” Chief Executive Officer Doyle R. Simons said in the statement.

Temple Inland rose $8.48, or 40 percent, to $29.49 as of 4:15 p.m. in New York Stock Exchange composite trading.

International Paper yesterday offered $30.60 a share in cash for Temple-Inland, a maker of corrugated packaging and building materials. The deal would increase Memphis, Tennessee- based International Paper’s share of the North American corrugated-packaging market to about 37 percent from about 27 percent, the company’s CEO John Faraci said in an interview yesterday. It would also enable cost cuts in International Paper’s corrugated-packaging business, he said.

“The high synergy potential suggests that IP may be willing to sweeten its offer,” Anthony Pettinari, an analyst at Citigroup Inc. in New York, said today in a report. He has a “buy” rating on International Paper, whose stock ticker is IP, and a “hold” rating on Temple-Inland. “We think competing bidders are unlikely.”

Weyerhaeuser Deal

The takeover would be International Paper’s largest since its August 2008 acquisition of Weyerhaeuser Co.’s corrugated- packaging business for $6 billion.

The offer values Temple-Island about 9.8 times its last 12 months’ earnings before interest, taxes, depreciation and amortization, according to Bloomberg data. That compares with the median 7.1 times for 87 deals in the forest-product industry in the past five years.

Evercore Partners Inc., UBS and law firm Debevoise & Plimpton LLP are advising International Paper. Goldman Sachs Group Inc. and Wachtell, Lipton, Rosen & Katz are advising Temple-Inland.

International Paper rose 13 cents to $29.78 in New York.

In January, Norcross, Georgia-based Rock-Tenn Co. agreed to buy Chicago-based Smurfit-Stone Container Corp. for $4.5 billion to become North America’s second-biggest containerboard producer, after International Paper.

The value of the offer for Temple-Inland was calculated using the 108.3 million shares that were outstanding on April 2, according to data compiled by Bloomberg.

--Editors: Simon Casey, Steven Frank.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.


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