Brazil's Suzano plans $15 billion bid for International Paper

Suzano has approached U.S.-based International Paper with a nearly $15 billion all-cash acquisition offer, sources revealed to Reuters.

This follows International Paper's recent agreement to acquire British company DS Smith.

This deal, which is scheduled to close by the fourth quarter of 2024, could be disrupted were Suzano to press ahead with its bid for Memphis-based International Paper.

Suzano has communicated its $42-per-share offer to International Paper's board of directors verbally, and could submit a formal bid in the coming days, according to the sources, who spoke on condition of anonymity. International Paper is poised to reject Suzano's offer as inadequate, one of the sources said.

Suzano said in a securities filing on Tuesday evening that it has neither signed any agreement with International Paper for a potential business combination nor has any decision been made by the company's management in respect to a potential deal.

International Paper's shares jumped as much as 12% on the news before paring some gains earlier on Tuesday, giving the company a market capitalization of about $13.5 billion. Its shares closed up more than 5%.

Shares of Suzano, which has a market value of 77.6 billion reais ($15.33 billion), closed down more than 12% in Brazil. DS Smith's shares in London fell as much as 7.3% before reversing most of those losses to close down about 1%.

Suzano, the world's largest pulp manufacturer, is in talks to line up debt financing to support its bid, and has informed International Paper that the offer would be conditional on the latter abandoning its deal with DS Smith, the sources said.

International Paper declined to comment on Suzano's approach, saying the company continues to focus on completing its deal for DS Smith.

"The IP team, led by new CEO Andy Silvernail, is executing on business strategies and pursuing commercial and cost improvement initiatives across the portfolio to achieve best-in-class profit margins and significant earnings growth. In addition, as industry conditions continue to improve, IP will come out of a cyclical bottom for earnings," International Paper said in a statement.