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Moody's: International Paper bid to acquire Smurfit Kappa is 'credit negative'

Moody's on March 7 said International Paper Co.'s €8.6 billion unsolicited offer to buy Irish packaging company Smurfit Kappa Group Plc with 60% cash and 40% equity is "credit negative".

The rating agency expects the potential acquisition to push up leverage, or adjusted debt/EBITDA, to 4.6x from 3.3x, as well as to bring long-term benefits, including enhanced geographic diversification and operational efficiencies.

International Paper's rating and outlook is not affected at this time because Smurfit Kappa Group has rejected the offer, and the pulp and paper company has not yet provided details on synergy benefits and deleveraging, Moody's said.