Smurfit Kappa has received an unsolicited acquisition proposal from International Paper (IP), which it has rejected.

IP reportedly proposed to acquire Smurfit Kappa, and Smurfit Kappa shareholders would receive a combination of cash and a minority holding in the combined business.

Europe’s largest cardboard box maker Smurfit Kappa said the proposal “fails entirely to reflect the Group’s strong growth prospects and attractive industry outlook” – which could leave the door open to an improved offer being considered in the future.

Smurfit Kappa’s enterprise value is about €9.8bn, according to FactSet data.

The board of Smurfit Kappa said after considering the proposal it was in the best interests of the Group’s shareholders to pursue its future as an independent company.

Smurfit Kappa recently announced EBITDA for 2017 of €1.2bn and a full year ROCE of 15%.

Plcs are obliged to ensure there is not a false market in their shares. It also increases the pressure on the bidder to comply with relevant regulatory timelines. This may have contributed to SKs decision to make the approach public.

Such a deal would create a super-group paper company and would mean a review of the deal by numerous competition authorities given the scale of the transaction and the spread of the two companies’ footprints. However, it may be deemed that these are more complementary than overlapping or there may be approval conditional on a number of divestitures. The Ball-Rexam mega deal approval also stipulated certain divestitures.

Liam O’Mahony, chairman of Smurfit Kappa said: “The Board of Smurfit Kappa has unanimously rejected this unsolicited and highly opportunistic Proposal.

“The Board believes that it is in the best interests of all stakeholders for the Group to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging. We strongly advise shareholders to take no action.”

International Paper did not comment.

Nicholas Mockett, head of packaging M&A at Moorgate Capital, said: “It is a strong rebuttal of the approach which may ensure IP walks away at this stage. A plc has a duty to shareholders to give due consideration to a legitimate approach. If IP increased its offer Smurfit Kappa would therefore reassess. The approach is not surprising given Smurfit Kappa’s strong position in Europe and Latin America and IPs strengths in North America. IP has recently increased its core focus, with the recent Graphic Packaging transaction.”