NEW YORK Corrugated packaging producer Temple-Inland Inc TIN.N asked its shareholders to reject a $3.3 billion hostile takeover offer from International Paper Co (IP.N), saying the bid undervalues its assets.
IP took its $30.60-per-share offer directly to Temple-Inland's shareholders last week after seeing its friendly, unsolicited bid rebuffed last month.
The Temple-Inland board's appeal to shareholders on Monday was widely expected and is just advisory. Shareholders are free to do as they wish, but the board can use a "poison pill," which lets a company increase its total share count at a discount to ward off a potential takeover.
Corrugated packaging, used to make shipping boxes, sells for razor-thin profits. If ultimately successful in the buyout, International Paper will be able to consolidate pricing power and extract higher profits for its own shareholders.
"The Temple-Inland board is unanimous in its belief that the offer grossly undervalues Temple-Inland and its prospects, including its position as the return-on-asset leader in the corrugated packaging industry," Temple-Inland Chief Executive Doyle Simons said in a statement.
IP responded by saying its billion offer is fair and well above where Temple's shares sat before the bid was publicly announced.
Temple's board has "unrealistic" price expectations, IP spokesman Tom Ryan said.
In a regulatory filing on Monday, Temple-Inland said Simons has met several times with IP CEO John Faraci. Each time, Faraci offered $30.60 per share, and each time Simons turned it down, according to the filing.
IP said that the two sides have been talking in the past month, though IP said it would not characterize the meetings as negotiations.
IP said Temple-Inland has so far declined to open its books, not an uncommon move for a company trying to fend off a hostile offer.
Shares of IP fell 2 percent on Monday to close at $29.29, while Temple-Inland shares fell 1.9 percent to $30.84.
(Reporting by Ernest Scheyder, editing by Gerald E. McCormick, Lisa Von Ahn and Bernard Orr)