Statement re Rejection of Revised Proposal from...

Statement re Rejection of Revised Proposal from International Paper

Smurfit Kappa Group PLC

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

Smurfit Kappa Group plc
(“Smurfit Kappa” or the “Group”)

Smurfit Kappa’s Board Unanimously Rejects Revised Proposal from International Paper

Fails to Reflect Smurfit Kappa’s Intrinsic Value, Track Record and Superior Prospects as an Independent Business

The Board of Smurfit Kappa (the “Board”) announces that it received a revised proposal (the “Revised Proposal”) from International Paper Company (“International Paper”) on Thursday evening, 22 March 2018. Under the terms of the Revised Proposal, Smurfit Kappa shareholders would receive €25.25 in cash (which would be reduced to €24.605 after payment of the final dividend of 64.5 cent recommended on 7 February 2018 and to be paid on 11 May 2018 (the “Final Dividend”)) and 0.3028 new shares of International Paper common stock for each Smurfit Kappa ordinary share held by them.

Based on International Paper’s closing share price on 23 March 2018 of $50.15 and a €:$ exchange rate of €1:$1.2353, the Revised Proposal would value each Smurfit Kappa share at €37.54, reduced to €36.90 when the Final Dividend is excluded.

International Paper’s proposal announced and rejected by the Board on 6 March 2018 valued each Smurfit Kappa share at €36.46 (without reduction for the Final Dividend). The Revised Proposal represents an increase in value of only €1.08 per share, equivalent to less than 3%.

Following careful consideration, together with its financial advisers, the Board has unanimously rejected the Revised Proposal. The Board is resolute in its belief that the best interests of the Group’s stakeholders are served by pursuing its future as an independent company, operating as the European and Pan-American leader in paper-based packaging. The Revised Proposal also fundamentally undervalues the Group and remains significantly below the valuations set by recent industry transactions.

The Revised Proposal continues to include a significant proportion of the consideration in the form of International Paper shares which are US-listed, represent uncertain value, and would expose Smurfit Kappa shareholders to the risk of significantly greater leverage and the challenges of integrating two businesses with fundamentally different cultures.

Liam O’Mahony, Chairman of Smurfit Kappa, said: “On 6 March, the Board of Smurfit Kappa unanimously rejected International Paper’s unsolicited and highly opportunistic proposal. The Revised Proposal does not offer Smurfit Kappa shareholders much more than compensation for the fall in International Paper’s share price since that date and again entirely fails to value the Group’s true intrinsic business worth and future prospects. We delivered a record performance in 2017 and underlying trading momentum has continued into 2018.

Moreover, the Revised Proposal does not make strategic sense for Smurfit Kappa and its stakeholders. Smurfit Kappa has a distinct business model and culture as a customer-oriented, performance-led packaging leader and has already communicated a strong plan to accelerate development and performance with its 2017 year-end results.

The Board unanimously reaffirms its belief that it is in the best interests of the Group’s stakeholders for Smurfit Kappa to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging”

Shareholders are strongly advised to take no action with respect to the Revised Proposal.

This announcement is made without the consent of International Paper.

There can be no certainty that any firm offer will be made, nor any certainty as to the terms on which any firm offer might be made, by International Paper.

This announcement contains inside information. The person responsible for arranging for the release of this announcement on behalf of Smurfit Kappa is Michael O'Riordan, Company Secretary. The date and time of this announcement is the same as the date and time that it has been communicated to the media, at 7am on 26 March 2018.

Notes:

Under International Paper’s Revised Proposal, the cash element would be adjusted for any dividends declared and/or paid after 22 March 2018, which would include the final dividend for 2017 which has already been recommended and is proposed to be paid on 11 May 2018.

Enquiries:

Smurfit Kappa Michael O’Riordan (Group Secretary)	Â	Â	Tel: [phone]
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Citigroup Global Markets Limited (Financial adviser) Michael Lavelle Robert Redshaw			Tel: [phone]
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Davy Corporate Finance (Financial adviser and Corporate Broker) Kyran McLaughlin			Tel: [phone]
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FTI Consulting (Public relations adviser) Mark Kenny Jonathan Neilan Melanie Farrell			Tel: [phone]
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Further Information
This announcement is not intended to, and does not, constitute or form part of (1) an offer or invitation to purchase or otherwise acquire, subscribe for, tender, exchange, sell or otherwise dispose of any securities, (2) the solicitation of an offer or invitation to purchase or otherwise acquire, subscribe for, tender, exchange, sell or otherwise dispose of any securities, or (3) the solicitation of any vote or approval in any jurisdiction, pursuant to this announcement or otherwise.

The distribution of this announcement in, into, or from, certain jurisdictions other than Ireland and the United Kingdom may be restricted or affected by the laws of those jurisdictions. Accordingly, copies of this announcement are not being, and must not be, mailed or otherwise forwarded, distributed or sent in, into, or from any such jurisdiction. Therefore persons who receive this announcement (including without limitation nominees, trustees and custodians) and are subject to the laws of any jurisdiction other than Ireland and the United Kingdom who are not resident in Ireland or the United Kingdom will need to inform themselves about, and observe any applicable restrictions or requirements. Any failure to do so may constitute a violation of the securities laws of any such jurisdiction.

Responsibility Statement
The Directors of Smurfit Kappa accept responsibility for the information contained in this announcement. To the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they take responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Citigroup Global Markets Limited (“Citi”), which is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and the Prudential Regulation Authority, is acting as financial adviser exclusively for Smurfit Kappa and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Smurfit Kappa for providing the protections afford to clients of Citi nor for providing advice in relation to any matter referred to herein.

Davy Corporate Finance, which is authorised and regulated in Ireland by the Central Bank of Ireland, is acting exclusively for Smurfit Kappa and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Smurfit Kappa for providing the protections afforded to clients of Davy Corporate Finance, or for providing advice in connection with the matters referred to in this announcement.

Forward-looking Statements
This announcement may include certain "forward looking statements" with respect to the business, strategy and plans of Smurfit Kappa or International Paper and Smurfit Kappa’s expectations relating to Smurfit Kappa's, or as the case may be, International Paper’s, future financial condition and performance. Statements that are not historical facts, including statements about Smurfit Kappa or International Paper or Smurfit Kappa's belief and expectation, are forward looking statements. Words such as "believes", "anticipates", "estimates", "expects", "intends", "aims", "potential", "will", "would", "could", "considered" and "likely", and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur.

Forward-looking statements only speak as of the date on which they are made, and the events discussed in this announcement may not occur. Subject to compliance with applicable law and regulation, Smurfit Kappa is not under any obligation to update publicly or revise forward looking statements, whether as a result of new information, future events or otherwise.

Rule 8 – Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Irish Takeover Rules, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Smurfit Kappa or International Paper, all "dealings" in any "relevant securities" of Smurfit Kappa or International Paper (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by not later than 3.30 pm (Irish time) in respect of the relevant securities of Smurfit Kappa and 3.30pm (New York time) in respect of the relevant securities of International Paper on the "business day" following the date of the relevant transaction. This requirement will continue until the date on which the “offer period” ends. If two or more persons co-operate on the basis of any agreement, either express or tacit, either oral or written, to acquire an "interest" in "relevant securities" of Smurfit Kappa, they will be deemed to be a single person for the purpose of Rule 8.3 of the Irish Takeover Rules.

Under Rule 8.1 of the Irish Takeover Rules, all dealings in relevant securities of Smurfit Kappa by International Paper, or relevant securities of International Paper by Smurfit Kappa, or by any party acting in concert with either of them must also be disclosed by no later than 12 noon (Irish/UK time) in respect of the relevant securities of Smurfit Kappa and 12 noon (New York time) in respect of the relevant securities of International Paper on the "business day" following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed can be found on the Irish Takeover Panel's website at www.irishtakeoverpanel.ie.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Irish Takeover Rules, which can be found on the Irish Takeover Panel's website.

If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, please consult the Irish Takeover Panel's website at www.irishtakeoverpanel.ie or contact the Irish Takeover Panel on telephone number [phone]; fax number [phone].

No Profit Forecast / Asset Valuations
No statement in this announcement constitutes a profit forecast for any period, nor should any statement be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for Smurfit Kappa or International Paper as appropriate. No statement in this announcement constitutes an asset valuation.

Publication on website
A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on Smurfit Kappa’s website at www.smurfitkappa.com and by no later than 12 noon on 27 March 2018.

The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.

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