Temple-Inland Rebuffs International Paper’s Acquisition Proposal
In its review of International Paper’s unsolicited proposal, the Temple-Inland board considered a number of factors and came to the following conclusions:
• International Paper’s unsolicited proposal grossly undervalues Temple-Inland and its future prospects:
* Based on the company’s internal estimates, as well as Wall Street consensus estimates, the Board believes the company’s accelerating growth of earnings and ROI will result in superior value to that offered by International Paper in a sale transaction.
* International Paper’s claims about its proposal rely on valuation metrics from "precedent" transactions that involved underperforming assets that are not comparable to Temple-Inland and its industry-leading returns, high-quality assets and low-cost structure.
* The retrospective focus of these "comparables" does not take account of the profound changes that are occurring in the corrugated packaging industry, which have led to reduced pricing volatility, higher average prices, and widely-held expectations that these positive industry trends will continue.
* The proposal fails to reflect the significant value the Company’s box plant transformation II project will generate for Temple-Inland and its stockholders.
* International Paper overstates the Company’s actual net debt by $91 million and the net present value of our timber financing liability by at least $200 million.
• The timing of International Paper’s unsolicited proposal is extremely opportunistic and disadvantageous to Temple-Inland stockholders:
* Housing markets are at historically low levels, temporarily depressing the value of our building products operations. International Paper is attempting to take advantage of our stockholders by moving to grab the Company at a bargain price at a time when there is little or no market value being ascribed to building products.
* As International Paper has consistently highlighted to the investment community, corrugated packaging demand remains below prerecession levels, but is expected to recover as the economy continues to improve. International Paper is attempting to time its offer before corrugated packaging demand returns to prerecession levels and pricing improves as expected by industry analysts.