Group of Hedge Funds Tries to Shake Up Smurfit-Stone Takeover Deal

Includes: IP, KS, PKG, SSCC, TIN, WRK
by: Market Folly

A group of hedge funds including Dan Loeb's Third Point, Royal Capital Management, and Monarch Alternative Capital recently penned a letter to Smurfit-Stone (NYSE:SSCC) opposing the company's proposed acquisition by Rock-Tenn (RKT). The hedge funds collectively own 9% of SSCC and oppose Rock-Tenn's cash and stock bid that valued SSCC at $38 per share.

Smurfit-Stone recently emerged from bankruptcy and these funds received the majority of their shares through the restructuring process. The various hedge funds are pushing for shareholders to veto the deal. They feel the company can either do better as a standalone company or attract higher offers from Rock-Tenn or others in the packaging industry (such as Temple-Inland (NYSE:TIN), Packaging Corp of America (NYSE:PKG), International Paper (NYSE:IP), MeadWestvaco (MWV), or KapStone Paper (NYSE:KS)).

We'll have to see if their letter can shake things up and unlock further shareholder value in the stock. Embedded below courtesy of Dealbook is the hedge funds' letter to Smurfit-Stone.

As we've detailed before, Third Point likes post-reorg equities and Smurfit-Stone is one of those positions. The hedge fund also has a sizable stake in recently re-listed Lyondell Basell (NYSE:LYB). And just a few days ago, we highlighted how John Paulson likes restructured equities as well.

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