1. Plan to acquire International Paper

On May 22, in a document submitted to the U.S. Securities and Exchange Commission, Shuzano confirmed its interest in acquiring International Paper's assets. This is the first time Shuzano has publicly acknowledged its intention to acquire International Paper. Recently, Shuzano has made new news - it is discussing funding issues for the acquisition of International Paper with several Asian banks.

Shuzano was founded by the Pfeiffer family in 1924 and is the world's largest producer of eucalyptus short fiber pulp. It has a huge competitive advantage in operating in Brazil. Brazil's climate, soil and trees provide faster planting speeds, so the cost is more competitive. In the international market, Shuzano has offices in the Americas and Europe, as well as a representative office in China.

According to a report by Western financial media Reuters on May 7, Shuzano has approached International Paper to discuss a possible all-cash acquisition of US$15 billion. At the time, a source revealed that International Paper planned to reject Shuzano's proposal, calling it "insufficient."

Recently, Reuters reported again that Shuzano is considering raising the acquisition price of International Paper - a few dollars higher than the US$42 per share of International Paper, and this news has been confirmed. Shuzano's potential acquisition condition is that International Paper abandons the acquisition of British packaging company Desma. It is reported that in April this year, Desma agreed to be acquired by International Paper for US$7.2 billion, and the transaction is expected to be completed in the fourth quarter of 2024.

2. The acquisition road faces major obstacles

If the acquisition plan is completed, the merger of Suzuno and International Paper will create a super giant covering every step from eucalyptus planting to corrugated box sales, with business in North America and Japan. The acquisition of International Paper means that Suzuno will enter the packaging industry, with more diversified business, while rapidly expanding scale and a wider sales market.

But there is no doubt that this acquisition plan will face major obstacles. On the one hand, in terms of sales, International Paper is more than twice that of Suzuno, not including the sales of Desma, which will be completed; on the other hand, Suzuno's debt burden has reached about 3.5 times its earnings before interest and taxes, which may significantly affect the company's cash flow.
Therefore, facing this acquisition plan, many foreign analysts and commentators have different opinions. Philip of Jefferies, a well-known Wall Street investment bank, commented: "It is difficult for us to imagine that International Paper will consider selling it to Suzuno unless the bid is significantly increased, and Suzuno does not seem to have the capital."

Brazilian financial services company Itaú BBA commented: "A potential transaction with International Paper would be consistent with Suzuno's recent intentions, as the company has been outspoken about considering mergers and acquisitions in North American and European papermaking businesses as potential growth paths."

However, several analysts also said that Suzuno's interest in International Paper may be more related to its pulp business than the acquisition of the entire company. A few weeks ago, Suzuno also announced a $9.9 billion agreement with Desma, which is expected to be completed in the fourth quarter of 2024.