What's going on?

Smurfit Kappa, an Irish paper packaging company, confirmed on Wednesday that it expects this year�s results to be ext-ream-ly good � a marked improvement on last year. The news comes a day after it sent a rival � International Paper � packing over an acquisition attempt.

What does this mean?

International Paper�s made two bids for Smurfit over the past three months � the latest being worth more than $10 billion � as it looks to cement itself as a leading player in the global packaging market.


However, Smurfit�s left its American counterpart feeling blue after it ignored both offers. The company believes it has strong prospects all on its own � Smurfit recently bought a Dutch packaging company for $540 million: partly to boost its growth prospects and partly to try to become too big to be bought itself.

Why should I care?

The bigger picture: Packaging companies are looking outside their own box.

Mergers and acquisitions are special deliveries for companies in the packaging industry right now � they hope to beef up and avoid price squeezes from the likes of Amazon. DS Smith, Amazon�s sole cardboard packaging supplier in the UK, acquired a Spanish competitor for �1.7bn this week � its largest acquisition ever.

For markets: Smurfit Kappa�s under pressure to deliver.

Acquisitions are usually a boon for share prices � the buyer pays a premium for control of a company, which tends to send its shares soaring. But with Smurfit rebuffing offers, its stock is now down almost 10% from its peak after the offer was made. Investors hoping to profit from any sale are likely disappointed they won�t be on the receiving end of a juicy premium anytime soon (IP can�t make a bid for another year). Investors who are sticking it out will be hoping Smurfit delivers on its promise of strong, independent financial performance.