Smurfit Kappa rejects a bid from International Paper

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

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.”

Unease over governments plastic packaging plan

Critics have hit back at the government’s 25-year plan with concerns over its litter strategy and a lack of praise for packaging’s role in combating food waste.

Unease over governments plastic packaging plan

Prime Minister Theresa May set out the government’s vision on the environment and wanted to end the “scourge” of plastic packaging in waterways and oceans. She outlined plans for a tax or charge on single-use packaging and urged retailers to introduce plastic-free aisles.

However, in a statement, the British Plastic Federation (BPF) said that it was “very disturbed” at the tone of the Prime Minister’s language and it did not recognise the 170,000 jobs that the plastics industry brings to the UK.

The BPF added: “To stop plastics entering the sea from the West, the plastics industry would like to see a tougher stance on littering. It is highly doubtful that simply providing alternative materials will actually reduce littering in the UK, as this is an issue of personal behavior. It should be noted that the types of products that enter the marine environment from the UK tend to be those that have been irresponsibly littered — not packaging materials for fresh produce that are typically consumed at home and then disposed of responsibly.

“Plastics should not be in the sea and it is right that the UK, alongside other developed nations, should set an example of best practice. As has been pointed out, the vast quantity of plastics in the seas arrive there from the less developed economies of Asia, which have rudimentary waste management systems. Plastics get into the seas by a number of routes and each route needs to be dealt with separately.”

Martin Kersh, executive director of the Foodservice Packaging Association, was also disappointed that the national litter strategy wasn’t mentioned. He added that food waste should form part of the government’s strategy.

“Food waste was not referred to by the Prime Minister along with the role that packaging has played in extending shelf life,” said Kersh. “Whatever we do [in regards to plastic packaging] we must not risk increasing food waste.”

He added that May’s speech did not place enough emphasis on the recycling of all materials and said that the packaging industry would “100%” provide evidence for the proposed tax on single-use plastic packaging.

“What we would like to see is PRN reform on the terms of reference,” said Kersh. “We would be disappointed if this was not the case.”

Lorax Compliance chief operating officer Michelle Carvell said that “real opportunities” had been missed to create a joined-up policy to tackle “the UK’s mounting waste crisis”.

“As it stands, the government’s plan is little more than a kneejerk reaction which works as a placeholder prior to the looming policy changes ahead in our post-Brexit landscape,” said Carvell. “It says very little and promises to deliver even less, with no legal force included in the strategy.”

Gillian Garside-Wight, packaging technology director at Sun Branding Solutions, said that a “holistic approach is required to address a very complex issue”.

She added: “In our experience when our clients have switched to more responsible packaging solutions this has required investment from product development through to supply chain alterations which may or may not be cost neutral.  The ongoing debate remains – who will pick up this cost?

“Consumers are the catalyst driving change, now along with the government pledge (not just us), this will result in big changes to consumer behavior and the retail environment.  Brands and retailers need to move faster to respond to their customers’ demands.  This is a good start, however, there’s lots of other challenges to be resolved. For example, back of store packaging that consumers never see. We must not forget the primary function of packaging is to contain, protect, preserve and promote and we must continue to ensure it does not damage the environment we live in.”

The government’s strategy was welcomed by David Palmer-Jones, chief executive of Suez Recycling and Recovery. He said that the plan “rightly places our environment at the heart of government strategy”.

He added: “Having invested heavily in new facilities to support the move away from landfill over the last decade, we are pleased that this plan recognises the important role energy recovery facilities have played in this transition and the ambition to make these facilities more efficient by identifying ways to increase the use of the heat they produce.

“Overall, the plan represents an important first step towards policies that will support the growth of our industry and enable it to play a pivotal role in the development of a more resource efficient, sustainable economy.  Systemic change is needed to tackle the complex issues facing us and ensure coordination with national infrastructure plans and the Industrial Strategy.  We urge Government to work with our industry on the detail of its new Resources and Waste Strategy to develop a world-leading approach for the UK.”

The Campaign to Protect Rural England. Samantha Harding, litter programme director said: “It’s impressive the government has chosen to respond so emphatically to the plastic plague that is already putting our countryside, cities, and oceans at risk of irreversible harm.

“The charge on plastic bags has shown that we easily adapt to financial incentives, so the prospect of further charges or taxes that could eliminate products like plastic straws and stirrers is really positive news. And promoting innovation amongst producers will be critical to ensuring we eliminate unnecessary single-use items, as well as making sure that they are taking financial responsibility for the impact these products have.”

Aluminium Can gets most recycled drinks container

Aluminium beverage cans have been made the world’s most recycled drinks container at a recent Smithers Pira conference.

Aluminium Can gets most recycled drinks container

The Smithers Pira Sustainability in Packaging Europe Conference heard stats from Metal Packaging Europe indicating seven out of 10 drinks cans sold in the UK are recycled and 75% of all aluminium ever produced is still in use today.

Steel for packaging recorded an average European recycling rate of 78% in 2015, which included five countries exceeding 85%.

With the greater focus being placed on packaging, consumers are now more concerned about waste produced and want to be informed of the most up to date recycling statistics.

Martin Constable, chairman of the Can Makers, said: “The news that aluminium cans are now confirmed as the most recycled drinks packaging in the world is great news for environmentally concerned consumers. The can is the ideal packaging of choice for brands to meet their own sustainability targets as well as meet customer demand for ‘greener’ packaging.”

Whilst these numbers are encouraging, there remains much to do to reach the 2020 metal packaging industry ambition of an 80% European average rate.

Analysts have called for a legislative framework to create a functioning circular economy.

Amazon delivery contained 45ft of packaging paper

Amazon criticised on social media for using up to 45ft of packaging paper to protect a wall calendar.

Amazon delivery contained 45ft of packaging paper

One customer posted images of the over-sized paper packaging; Annie Gelly purchased the £9 Collins A2 calendar online expecting it to arrive in a Jiffy bag or envelope and was shocked to see ‘such a waste’ of paper.

“The calendar arrived last Thursday and it has masses of paper in the box – there were nine lengths of screwed-up brown paper which measured about 45ft in total.

“Amazon always package stuff this way – I’ve had things like this in the past and they’re particularly prone to it – but this really took the biscuit. I think it’s bad for the environment and you would have thought Amazon of all people would be aware of that kind of thing and try to be more careful.”

In another order, the length of paper was 26ft long.

That unnamed customer said: “I know that the paper they use is recycled, but I can’t help but think Amazon are still chopping down the rainforest. It was so excessive – but on the plus side, I won’t need to buy any wrapping paper this Christmas.”

An Amazon spokesperson said: “We continue to pursue multi-year waste reduction initiatives – e-commerce ready packaging and Amazon Frustration-Free Packaging – to promote easy-to-open, 100 percent recyclable packaging and to ship products in their own packages without additional shipping boxes.

“These initiatives have grown to include more than 1.2 million products over time and have eliminated more than 36,000 tons of excess packaging just in 2015. If executed well, our innovations will also help us to reduce prep, packing material and shipping supplies and reduce our operational costs by increasing the use of recycled materials. They will also increase the overall density of the packages we ship – good for transportation savings and less waste for our customers – and reduce the things that get damaged in transit and eliminate wasted packaging.”

A coherent plan needed for on-the-go packaging

Plastic beverage bottles were under the spotlight as MPs continued to quiz industry figures as part of the inquiry into disposable drinks packaging.

A coherent plan needed for on-the-go packaging

The Environmental Audit Committee heard evidence from packaging and retail experts, who defended plastic packaging while also arguing that a coherent strategy for on-the-go packaging was needed.

Barry Turner, director of plastics and flexible packaging at the British Plastics Federation, argued that the sector was taking action to boost recycling rates as well as improving the amount of recycled plastic in bottles. But he argued that the UK’s contribution to plastic pollution was small compared to other countries.

Also giving evidence was Alice Ellison, head of the environment at the British Retail Consortium, who said: “We want to move to a circular economy but why just look at plastic bottles? There is a gap [in recycling] from on-the-go consumption. That needs to be addressed.”

Gavin Partington, director general of the British Soft Drinks Association, said that the UK did not have adequate recycling facilities.

He said: “Our sector wants to reuse as much as possible. We want to work with the government to get some consistency. There is consumer confusion on what to recycle and where.”

Ellison added: “The PRN system is not perfect. You currently have a perverse incentive to export waste abroad. That could be removed very quickly. A reformed PRN could have ring-fenced budgets to tackle different things. If the business does this alone then not everyone will come with us. It needs vision and a strategy from government.

Another concern was how the waste policy would be shaped post-Brexit. Turner said that the EU circular economy package had been a major driver for change and that he would not want to see a divergence in riles.

“We rely on Europe for a lot of legislation which has been, by and large, beneficial,” he added.

Turner said that the plastic packaging industry was keen to see improvements in recycling and said that the sector was calling for a more consistent approach to design. He was challenged by the committee’s chair Mary Creagh MP, who asked why unrecyclable films were wrapped around plastic bottles.

“We advocate that they use the right material,” said Turner. “We cannot dictate to a brand what they should do. It’s a commercial decision for them.”