01—Abstract
Summary
Summary of the 8-K filed October 1, 2024. Cited figures are marked; the original filing is the authoritative source.
International Paper Company (IP) filed this Form 8-K to supplement its definitive proxy statement, filed September 12, 2024, for the proposed issuance of new common stock as the stock consideration in its all-stock recommended offer to acquire DS Smith Plc.
The Special Meeting of shareholders to approve the share issuance is scheduled for October 11, 2024 at 11:00 a.m. Central Time. The filing states that two complaints were filed on September 19 and 20, 2024 in the Supreme Court of the State of New York, and that several shareholders sent demand letters from September 4 to September 27, 2024.
The complaints allege the proxy statement omitted material information, and the plaintiffs seek to enjoin the acquisition until additional disclosure is made or, if it closes, seek rescission or damages. The company states it believes these claims are without merit and that no supplemental disclosure is required, but has voluntarily supplemented the proxy statement to reduce the risk of delay or adverse effects on the closing. The supplemental disclosures amend and restate portions of the financial analyses prepared by BofA Securities for both companies.
For DS Smith, BofA applied an adjusted EBITDA multiple reference range of 6.5x to 8.5x to calendar year 2024 estimates, a perpetuity growth rate range of 2.00% to 3.00%, and discount rates of 8.00% to 10.00%. For International Paper, BofA applied an adjusted EBITDA multiple reference range of 7.5x to 9.5x, a perpetuity growth rate range of 2.00% to 3.00%, and discount rates of 7.50% to 9.00%. The International Paper analysis uses net debt of approximately $4,449 milliona as of December 31, 2023 and approximately 354.259 million fully-diluted shares.
The analyst price target ranges for International Paper common stock were $36.60 to $43.00b as of April 12, 2024. The filing states that these updates supersede the corresponding information in the proxy statement.
02—Key points
Key Highlights
- Special Meeting of shareholders to approve the share issuance for the DS Smith all-stock acquisition is scheduled for October 11, 2024 at 11:00 a.m. Central Time.
- Two shareholder complaints were filed on September 19 and 20, 2024 in the Supreme Court of the State of New York, alleging the proxy statement omitted material information and seeking to enjoin the acquisition or obtain rescission or damages.
- Five demand letters from purported shareholders, dated September 4 to September 27, 2024, seek corrective disclosures to the proxy statement.
- International Paper states the claims are without merit and that no supplemental disclosure is required, but it voluntarily supplemented the proxy statement to limit litigation risk and possible delay of the closing.
- BofA Securities applied an adjusted EBITDA multiple reference range of 7.5x to 9.5x to International Paper and 6.5x to 8.5x to DS Smith for calendar year 2024 estimates.
- The International Paper analysis uses net debt of approximately $4,449 million as of December 31, 2023 and approximately 354.259 million fully-diluted shares, while the DS Smith analysis uses net debt of approximately £2,089 million and approximately 1,400.261 million fully-diluted shares.
- Wall Street analyst price targets for International Paper common stock ranged from $36.60 to $43.00 as of April 12, 2024.
03—Questions
Frequently Asked Questions
When will shareholders vote on the DS Smith share issuance?
The Special Meeting of shareholders to approve the issuance of new International Paper common stock is scheduled for October 11, 2024 at 11:00 a.m. Central Time.
What do the lawsuits allege, and what do the plaintiffs seek?
The complaints, filed September 19 and 20, 2024 in New York State Supreme Court, allege that the proxy statement omitted material information and that the defendants engaged in negligent misrepresentation and concealment under New York common law. The plaintiffs seek to enjoin the acquisition until the allegedly material information is disclosed or, if the acquisition closes, to rescind it or recover actual and punitive damages.
Does International Paper agree that the proxy statement was deficient?
No. The company states that it believes the claims in the complaints and demand letters are without merit and that no supplemental disclosure is required under applicable laws. It supplemented the proxy statement voluntarily to reduce the risk of delay or adverse effects on the closing, without admitting liability or wrongdoing.
What valuation ranges did BofA Securities apply to International Paper?
BofA applied an adjusted EBITDA multiple reference range of 7.5x to 9.5x to International Paper's calendar year 2024 estimates, a perpetuity growth rate range of 2.00% to 3.00%, and discount rates of 7.50% to 9.00%. It deducted net debt of approximately $4,449 million as of December 31, 2023 and divided by approximately 354.259 million fully-diluted shares to derive an implied per-share range.
How does the supplemental disclosure affect the original proxy statement?
The filing states that where the supplemental information differs from or updates the proxy statement, the Form 8-K supersedes the applicable information. The amendments restate the disclosures on the selected publicly traded companies, selected precedent transactions, discounted cash flow analyses, and analyst price targets for both International Paper and DS Smith.
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